January, the front month for the NBP fell to a five-week low on Thursday

Gas Market  

Wholesale natural gas prices tumbled lower on Thursday after the latest long range weather forecast shows a relatively mild first quarter for 2025.  The January contract for the NBP fell by over 4.00p per therm for the second time this week and settled at 106.18p, the lowest settlement for five weeks.  Further out, Summer-25 declined by 3.31p to settle at 101.00p, this narrowed the gap to the Winter contract to just 0.20p. Closer in, forecasts for wind generation for next week have been ramped up and the prompt also fell sharply with the contract for next week down by 4.70p.  GB import capacity through the Balzgand Bacton Line interconnector is to be trimmed by 44% from Friday, however the market shrugged this off as imports through the line for December so far have been negligible as LNG supplies have been replacing the need for imports from the continent.  

Power Market

Sharp declines to gas and carbon weighed on the GB baseload power curve yesterday.  With near month NBP futures falling by an average of 3.90p per therm and Carbon EUAs contracts down by over €3.00 per tonne, baseload futures followed suit. The front month yielded £3.75/MWh, but the February contract posted the greatest loss yesterday and settled £4.00/MWh down at £97.75/MWh which was the same price as January. Wind generation is forecast to remain low for the rest of the week but has been revised higher for next week.  Baseload for the Day ahead eased by 23.6% yesterday but remains elevated at £147.13/MWh as wind not expected to exceed 3.0GW on Friday.    

Oil Market

The crude oil markets settled flat yesterday after the release of the latest surplus forecast for 2025 from the International Energy Agency. The front month for Brent traded in a tight range between $72.42 and $74.00 a barrel before settling 11 cents down day-on-day at $73.41 a barrel.  The IEA, based in Paris, released its latest forecast for next year and shows a 950,000 barrel per day surplus which could rise to circa 1.3m bpd if OPEC+ follows through on their plan to increase production from April.  Countering the downward movement on the day were expectations of a further cut to U.S. interest rates after the latest inflation data for the U.S. indicates the economy is on track to meet targets.  The European Central Bank confirmed their fourth reduction to interest rates this year as inflation across the Eurozone neared its 2.0% target.    

Markets this morning

NBP futures opened lower this morning with the January contract clocking in at 105.14p, however, prices have ticked up in the last hour and the front month is 0.77p up at 106.95p.  Quarter-1 has edged higher by a similar amount while the contract for next summer is flat. Trading has been slow to get going on the prompt screen, but the gas system is balanced according to the National Grid.  Crude oil prices have opened firmer this morning and the global benchmark contract for February is 55 cents up at $73.96 a barrel as the markets look to China’s latest stimulus plan for support.