Gas Market
The GB gas system remained well supplied and ran with a surplus on Thursday despite outages at Sleipner and Oseberg. These outages impact gas supplies to the continent more so with up to 16mcm of capacity unavailable and pushed prompt and near futures higher yesterday. Wind forecasts for the next week have been revised lower for northern Europe and the UK, which should add to gas demand, and this also added to the upside. The Spot and Day ahead products for the NBP gained around 4.00p per therm on the day. Geopolitical risk continues to underpin futures, and the front month traded to a high of 107.31p yesterday before slipping back late in the session to close at 106.38p and posting a gain of 2.70p. This brings the increase for the week to 8.39p or 8.6%. Further out, the Summer-25 contract closed in on the 100p per therm mark, adding 1.71p to settle at 98.83p.
Power Market
GB baseload futures settled higher for a fourth session in a row on Thursday supported by gains in NBP gas futures and higher carbon. Forecasts for lower wind generation also propped up prices yesterday with the Day ahead rising to £100.39/MWh. On the curve, the front month added £3.22/MWh bringing the gain for this week to £8.55/MWh or 10.0%. Carbon EUAs continued to rally higher with the Dec-25 contract adding €1.73 per tonne yesterday.
UK renewables continue to displace gas and nuclear generation in the power stack with recent reports showing gas fired nuclear generation for October to date is around 22.2% down on the average output for the same period from 2019 to 2023.
Oil Market
Early gains to crude oil prices were reversed yesterday on fresh hopes of a ceasefire in the Middle East as diplomats from the U.S. and Israel to meet in Doha, Qatar for talks. President Biden is believed to be pushing to get a truce before the U.S. election takes place in early November. The U.S. Secretary of State is already in Doha and is expecting to meet with the Israeli delegation on Sunday. Brent had traded up to $76.54 early on but settled at $74.38 a barrel which was a day-on-day loss of 58 cents a barrel. Also weighing on crude oil prices yesterday was a survey which shows business activity across the Eurozone is slowing this month while preliminary forecasts for the Purchasing Managers Index for October is coming in below 50 which would indicate a contraction.
Markets this morning
The lower wind generation has increased gas demand this morning, but the GB gas system is forecast long according to the National Grid website. Wind is forecast below 5.0GW for today and is expected to remain below the seasonal norm for the next week or so. The prompt screen has yet to show any trades, however, gas futures have opened firmer and early gains have been extended to around 2.00p for the front months of the NBP curve. Carbon EUAs for 2024 and 2025 have consolidated recent gains and moved around 30 cent per tonne higher this morning. In the crude oil market, Brent has ticked up by 27 cents to last trade at $74.65 a barrel which is just below the 50-day average.
25 October 2024
