Gas prices tumbled on Wednesday with November shedding 4.62p

Gas Market 

Gas prices tumbled on Wednesday as risk premium added for an escalation of the conflict in the Middle East fell away.  The front month, November, on its final day on ICE shed 4.62p per therm while futures for the remaining winter months fell by an average of 3.90p.  Forecasts for above seasonal norm temperatures coupled with increased wind generation also weighed on the near curve and prompt yesterday.  The Spot and Day ahead products were also down by around 4.55p at the close. The change in risk profile could see further declines to gas prices over the coming days as U.S. delegates are to visit Egypt and Israel on Thursday to keep hopes of a ceasefire alive.  

Power Market

With both gas and carbon posting sharp declines yesterday, the GB baseload curve was also marked down at the close of play.  The front month received the lion’s share of focus on the day and settled over 5.1% down. Baseload for the Day ahead fell by over 13.5% to £92.87/MWh with forecasts to increase while temperatures are expected to remain mild for the short term. The National Grid is expecting wind generation to nearly double to 9.0GW on Thursday. Carbon prices for EUAs and UKAs tumbled on Wednesday with speculative traders taking profits after recent gains.  The Dec-25 contract for EUAs fell by 99 cent to €67.84 while UKAs were down by an average of 4.6%.  

Oil Market

After two days of declines to crude oil prices, the market rebounded on Wednesday after U.S. inventory report showed a surprise decline to stocks.  Gasoline reserves in U.S. holdings fell to a two-year low last week implying an increase in demand while crude oil stocks fell to 425.5 million barrels.  The fall in gasoline stocks may be due to overcoming the backlog of delays in deliveries caused by hurricane activity earlier in the month.  The dollar also softened yesterday after being buoyed in recent days by a swell of support for Donald Trump. If Trump regains the presidency, it is likely to spur a rally in the greenback. There have been reports that OPEC+ may delay their planned increase in production for December while supplies are high.  At the close, Brent settled $1.43 higher at $72.55 a barrel.

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.