Significant volatility remains within the UK gas market

 The see saw nature of the UK NBP market continued

The see saw nature of the UK NBP market continued on Thursday as contract moved between losses and gains over the course of the day.  Market fundamentals were once again consistent with recent days as the system ran with a surplus of 5MCM on a forecast demand of 145MCM.  There is no one real discernable fundamental driver that is giving the market direction and price movement is quite volatile as a result.  While recent heavy losses have caused quite amount of confusion there remains an element of support for prices at their current level.  It remains to be seen if this support sustains in the medium to long term.  

 GB baseload power at the front of the curve firmed

GB baseload power at the front of the curve firmed on Thursday despite displaying some weakness at the beginning of the session.  Further out the power curve in the seasons contracts gave up modest amounts of premium on Winters 2022 and Winter 2023. The August 2021 contract added over £3.20 to recover some ground to £86.00/MWh. Low wind generation increased the burden on conventional gas generation with CCGT generation accounting for 50% of the stack.  Just over 5GW was being imported from continental Europe.  The day ahead price closed at £89.95/MWh, down by £2.50.  

 Crude oil moved to its highest point in nearly three years

Crude oil moved to its highest point in nearly three years on the 5th of July but that was a good as it got as prices have been under pressure since then.  Crude oil has posted losses of $2.63 and $1.10 in the preceding two sessions as the markets fretted about the carefully constructed consensus within the OPEC+ group on production quotas.  Yesterday’s market went into pause mode and participants stalled to gauge if there was going to be developments on reaching an agreement.  The Brent crude contract did not stray too far above its opening position with a 69-cent gain being the best it got to during the session.  The contract settled at £73.43 a barrel in a cautious say of trading.  

EUA carbon contract are firming

The UK gas market has opened with a gap up in prices as significantly volatility remains.  The front month August contract is up by 6.34p per therm as it trades at 88.49p.  The September and October contracts have added similar amounts.  Further out the curve beyond Winter 2021 price movement has been minimal with few trades going through.  Once again there is no change in the overall fundamental position which would give rise to the market movement.  Gas demand for today is coming in at 140MCM, 5MCM lower than yesterday and the system is 10MCM long.  EUA carbon contract are also firming with €1.54 added so far.  Brent crude is priced at $74.71, up by 59 cents.