Market Insight
Tony Jordan
8 December 2022

Market Insights 07/12/2022

A fairly level day after a bearish looking start to yesterday as the market came back to a neutral point towards the close.

Yesterday the UK Chancellor gave his Autumn Statement with a target of closing the £55bn budget gap. For energy the key takeaways were the extension of the Energy Bills Support Scheme for households being extended by a year from April with an increased ‘headline rate’ of £3,000 (from the current £2,500). He was silent on any potential extension for businesses but HM Treasury have released a document that outlines the criteria for the three month review, which appears to focus on ‘vulnerable’ businesses, and will announce a decision no later than 31st December 2022.

The ‘windfall tax’ increasing from 25% to 35% on the big oil majors and a new levy introduced on electricity generators at 45% (after an allowance) from 1st January 2023 for the next 5 years.  These two ticket items are expected to raise some £14bn annually. We will wait to see how electricity generators react to this surprising new tax.

Looking at the latest long term weather runs, we see a bit of a cold spell for the next few days (dipping below seasonal normal), before rising above again next week through the end of the month and then December looks to be slightly below seasonal normal at this point.

Yesterday saw the TTF December contract settle at €112.56 (from €113.90) and the NBP November contract at 267.85p (from 269.73p).

Asgard and Kollsnes on unplanned outage this morning and we see a flow level at 314mcm from Norway (299). Russian nominations showing Velke Kapusany at 37.6mcm (40.7) and Sudzha at 42.4mcm (42.4). Flows on Nord Stream are now a likely physical impossibility. Gas storage showing at 95.38% full as per AGSI+. LNG vessels due to arrive in UK next couple of weeks is 15.

This morning we see the December TTF contract at €115, UP €2 to the previous settlement. 

A quick check on some key contracts:
Curve TTF December €115, Summer €121 (vs €113 and €121)
Curve NBP December 268p, Summer 286p (vs 279p and 286p)
UK Gas NBP spot 90p (from 80p).
UK Power DA £111 (from £117).

UK power prices show the UK December Baseload contract at £260 (£265) and Summer at £259 (£255).

In other areas of the market Brent Oil is at $90 ($93) and EUAs are at €72 (€73). Henry Hub is at $6.37 ($6.20) and JKM is at $26.32 ($25.89).