Oil and Gas Markets
Oil continued its downward path at yesterday’s close with the Brent frontmonth contract settling at $84.49 per barrel as its maturity date forced traders to close their positions. Throughout the session, Brent hit a threeweek low as interest rate hikes and abundant supply from Russia worried traders about the contract’s mid-term performance. Equities rebounded slightly, opposite to expectations, as the Fed is meant to announce further interest rate hikes today. It is widely expected that the Fed will announce hikes of 25 basis points, while the European Central Bank as well as the Bank of England will opt for greater, 50-point hikes.
Gas & Power
Colder temperatures and lower wind forecasts next week have added in some risk again in the markets, with prices responding accordingly yesterday. Conditions for this week at least are very favourable, with strong wind and mild across the UK.
It has been a quiet opening on the trading front this morning, but of what has traded have been relatively flat in price.
The difference now between a 1 and 2 year fixed price is minimal, with the forward curve very flat over the next two years before dropping off in 2025. Winter-23 is the premium in the market with gas closing at 181p/them, UK Baseload at £177MWh.
Tomorrow is a big day in the financials, with both the BoE and Fed expected to raise interest rates further. This expectation is acting bearish on oil prices and trading lower as a result.
How the market is averaging out
Date Electric (£/MWh) Gas (p/therm)
Last 7 days 130.83 143.33
Last Month 136.37 153.89
Last Year 214.05 208.97
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