An emergency halt to operations on the Norwegian Sleipner B platform gave support to NBP

Gas Market

An emergency halt to operations on the Norwegian Sleipner B platform gave support to NBP contract prices. It is anticipated that the outage at Sleipner B will be extended for a number of days although the loss of 7mcm/d is relatively small and will likely be substituted by supplies from other North Sea platforms. Front month November-24 rose 1.74p to 101.89p/therm and the Day-ahead contract settled at 101.25p/therm, the first time since Early December 2023 that the contract settled over 100p. Also contributing to the bullishness on the prompt was an unplanned outage at the British Perenco Bacton terminal, and the ongoing conflict in the Middle East. All energy markets await Isreal’s retaliation for the Iranian attacks, with the risk that it could target energy infrastructure slowly seeping back into oil and gas markets.

Power Market

Upward momentum on the NBP, due to outages feeding into the UK gas system, gave support to power contract prices. Import capacity between the UK and France was also reduced by approximately 75% due to outages on the IFA1, IFA2 and ElecLink interconnectors. The November 24 contract rose £1.20 to £88.25/MWh. The Day ahead power contract climbed £4.65 to close at £91.25/MWh although gains were capped by warmer temperatures and stronger than average wind generation. Early losses for EUA contracts were reversed by the spike in natural gas and power contracts on reports of a North Sea outage. The Dec-24 contract closed at €62.26/tonne, up 46 cents.

Oil Market 

Crude oil contracts made gains for the second consecutive day as prices continue to recover from last week’s 7% decline. The Brent front month contract increased by $1.75 at the close amid continued concerns for events in the Middle East. Despite US Secretary of State Blinken’s arrival in Israel fighting continued. There remains a risk that Israel’s retaliation on Iran could impact on the supply of oil from the region, with prices ebbing and flowing as news swings from escalation to escalation in the region. Adding to the upward pressure was the cutting of China’s benchmark’s lending rate, the latest measure aimed at reviving the stagnating economy. The interest rate cut, and the latest stimulus package has led the Saudi State-owned oil company, Saudi Aramco, to state it was bullish on Chinese demand.

Markets this morning

Despite ongoing problems with the Sleipner B gas production platform in Norway, the UK gas system is oversupplied this morning. Equinor, the operator of the platform, has been able to increase production at other gas fields to substitute the small volume that has been lost. However, the strong supply is not enough to temper movements on the NBP, with all contracts trading higher this morning. The Brent front month contract is in decline following the release of industry data showing an increase in US crude inventories. The losses are being tempered by the conflict in the Middle East as Israel continues to attack Gaza and Lebanon. EUA carbon prices are also bullish this morning, trading over €1.50/tonne higher than Tuesday’s settlement.