Gas Market
Friday’s trading session began with prices relatively flat compared to Thursday’s close with contracts trading marginally lower. Throughout the day, both the front month and the new front quarter hovered just under half a penny down, reflecting a subdued day in the NBP gas market. The market found support from the ongoing cold weather and deliberations over the potential impacts of the termination of Russian gas transit through Ukraine at the end of 2024. On Thursday, the European Commission issued a statement affirming that the cessation of the transit agreement had been effectively planned for, with strong coordination across Europe ensuring no risks to the security of supply. The market appeared to factor this reassurance into pricing as the session progressed. Prices dropped by a further penny shortly before the close, with February settling at 123.82p/th and Q2-25 at 119.54p/th, declining by 1.36p and 1.55p respectively.
Power Market
GB Baseload power futures tracked the losses on the NBP with the Q2-25 contract and its constituent contracts the biggest benefactor of the losses. On the prompt concerns for, or rather the difficulty in predicting, wind speeds saw prices for the week beginning the 6th of January remain supported. The lack of firm forecasts for wind generation saw the day ahead little moved from Thursday’s close while the working day next week contact increased by $2.00/MW.
EUA contracts continued higher in Friday’s session supported by the strong European gas market. The spot market increased by 78 cent per tonne while the biggest mover was for allowances further out. the Dec-27 EUA contract settled at €80.92/tonne, an increase of €1.99 from Thursday’s close.
Oil Market
Oil continued its strong start to 2025 as the front month contract increased in value and settling at its highest assessment since October. Friday’s session had begun with prices increasing however the impact of an economic stimulus package in China prices increasing once more. China announced an increase in wages for Government workers in an effort to increase consumer spending and kick start the Chinese economy in 2025. This in turn improved the demand outlook for the coming year. Also impacting on prices and sentiment is the current cold weather snap. The cold weather could run down fuel inventories and boost demand for crude oil, adding to the upward momentum witnessed on crude contracts recently. As a result, the Brent front month contract increased by 58 cents settling at $76.51 a barrel while WTI front month increased to $73.96/bbl.
Markets this morning
The NBP gas market continues to decrease in value this morning, with the front month last trading at 121.23p/th. The market may be coming to terms with the loss of Russian gas via Ukraine which is helping prices to shed minimal value. However, prices are proving slow to return to lows witnessed in mid-December as high demand persists due to ongoing cold weather. Meanwhile, Brent crude oil has retreated from its recent highs, influenced by a strong US dollar, which tends to dampen demand for dollar-denominated crude. Additionally, market participants are closely monitoring the Federal Reserve’s interest rate outlook, which is providing some support to prices this morning.
06 January 2025
