October, the front month for the NBP, settled at its lowest level since the end of July

Gas Market

Natural gas futures on the NBP were back in decline on Thursday as the gains from the previous session were reversed.  Futures had increased ahead of scheduled maintenance at several Norwegian gas fields which has been ongoing since the end of August and is due to start winding down over the next week or so.  There have been a few unplanned outages during this time, but supplies have coped under pressure.  The UK gas operator employed storage gas at times but generally the system has coped without dipping into reserves. After some flip-flopping the near curve demonstrated weakness yesterday afternoon. The front month, October, fell by 2.89p to 84.42p, the lowest level since the end of July. Yesterday’s decline brings the loss for October to 11.73p since the last day in August.  

Power Market

The late decline in NBP futures fed into the GB baseload power curve yesterday. October declined by £1.58/MWh to £72.18/MWh while the Winter-24 contract settled at £84.00/MWh, down £2.00/MWh.  The outage on the IFA2 has been extended by another week but prompt prices for the week ahead still eased although lower wind forecasts did prop up the Day ahead contract yesterday. Carbon EUA contracts out to Dec-26 tracked gas prices lower on Thursday and fell by an average 1.4% or 93 cent per tonne.  However, the Spot for EUAs settled €0.48 higher at €64.68 per tonne yesterday, while UKAs also recorded a modest increase on the day.

 Oil Market 

Crude oil prices put in another robust shift on Thursday as Brent rose by $1.36 a barrel as oil producers were left weighing up the impact of Hurricane Francine.  As a precaution almost 42% of the output from the Gulf area was shut-in ahead of the arrival of Francine which has been downgraded to a tropical storm since making landfall on Wednesday. The impact on supplies may not last as long as originally thought as some ports and refineries in Texas had already taken shutters down and restarted on Thursday which could shift attention back to poor demand.  Weak demand especially in China, the world’s largest oil importer, was partly behind the reason for The International Energy Agency trimming its growth forecast for 2024 by over 7.0% on Thursday.  

Markets this morning

The energy markets have opened firmer this morning with gas, oil and carbon prices all adding premium in the early hours.  NBP futures are over a penny higher, but October is 2.33p up on last night’s close. Prompt prices are also up with the Spot ignoring a comfortable gas system and has moved 1.50p higher although trading has been thin on the prompt screen.  According to the National Grid, the GB gas system is forecast to run 13mcm long against a demand of 136mcm for today.  In the crude oil markets, Brent has continued to move off its recent multi-year low and last exchanged at $72.39 a barrel. Carbon EUAs for Dec-24 and Dec-25 are around 25 cent per tonne higher.