NBP futures eased for a third day on Thursday with near months averaging losses of 1.78p per therm

Gas Market

Near months for the NBP curve eased by around 2.00p early on Thursday but with reports of Isreal potentially holding up the ceasefire the market failed to gain any further momentum. The February contract settled 2.06p lower at 116.39p per therm while the Summer-25 contract was down 1.40p at 114.13p.  After opening softer the prompt moved sideways for the rest of the day with contracts closing between 1.20p and 1.88p down from the previous settlement.  The prompt market shrugged off a short gas system yesterday, but increased wind is expected to curb demand from the weekend.  In the U.S., the Freeport LNG facility in Texas ramped up nominations after a dip earlier in the week and with demand for LNG in Japan expected to ease as more nuclear reactors are restarted, this could be a boost for Europe.

Power Market 

On Thursday we witnessed GB power contracts ease after initial weakness on the NBP curve and contracts held losses to the close.  February was the clear winner of the day as the contract shed £2.77/MWh with much of the focus on the front month yesterday.  Contracts further along the baseload curve were marked down by around £1.15/MWh on average. Carbon EUAs posted minor losses yesterday while UKAs for 2025 and 2026 hit new lows for a year and were down by 2.6%. Wind generation is expected to pick up a little on Friday and this helped the Day ahead contract ease by £6.86/MWh.  Generation from wind from the weekend is forecast to rise well above the norm possibly increasing by 33% from current levels.

Oil Market

The imminent ceasefire agreement weighed on the crude oil market yesterday as Brent dropped 74 cents to close at $81.29 a barrel.  When the ceasefire is agreed it is expected shippers will return to using the Red Sea which will improve delivery times between East and West.  Houthi Rebel attacks on shipping in the Red Sea caused many shippers to divert around the Cape of Good Hope which added to cost and delivery times.  A boost for demand came from the U.S. retail sales for December which saw a 0.4% increase. The Federal Reserve Governor, Christopher Waller, said that despite the growth in December, inflation is likely to continue to ease and possibly allow for further cuts to interest rates.

Markets this morning

A short gas system is providing support to the prompt this morning with the National Grid showing a 15mcm deficit against today’s demand of 297mcm. The Day ahead is just over a penny higher having last traded at 119.25p per therm.  NBP futures opened a penny down on last night’s close but latest exchanges have seen the market reverse those losses and February is a penny up at 117.46p. Brent is trading sideways this morning and the latest trade has gone through at $81.44 a barrel for the March contract. The ceasefire between Israel and Hamas looks set to get the go ahead from Benjamin Netanyahu and his cabinet this morning and the hostages are expected to be released on Sunday.