Market Insight
Tony Jordan
20 January 2023

Market Insights 20/01/2023

A fairly level day yesterday, starting with a small increase showing on the month ahead TTF contract at the open before discounting later in the session. A small loss at the end of the day to the previous session.

The latest weather runs show the current cold spell ends in the coming days and likely to stay at or just above seasonal normal for the next couple of weeks. However it then dips below seasonal normal around 11th February for the rest of the month. Of course these are long term forecasts and so less accurate that far out.

The dip in flows from Russia via Ukraine this week are likely to be commercially driven – a result of spot prices dipping below the contract price mechanism set in those contracts.

With prices staying lower than seen in recent weeks, this will be welcome news to consumers as we’ve previously noted. The Ofgem price cap is still being calculated to take effect in April and we currently forecast that to out-turn at £3,225 with around a month of calculations still to come (so two-thirds into the calculation). That is still above the government support rate of £3,000. However periods beyond that are expected to be lower than the EPG value (we currently estimate a £1,000 drop for the July price cap), meaning little to no government support is to be currently expected.  These values of course are for what Ofgem describe as the ‘typical’ customer usage over a year and not a financial cap for all households.

Yesterday saw the TTF February contract settle at €60.72 (from €61.71) and the NBP February contract at 152.52p (from 153.88p).

No unplanned outage this morning and we see a flow level at 324mcm from Norway (324). Russian nominations showing Velke Kapusany at 19.4mcm (19.4) and Sudzha at 24.4mcm (24.4). Flows on Nord Stream are now a likely physical impossibility. Gas storage showing at 80.59% full as per AGSI+. LNG vessels due to arrive in UK next couple of weeks is 14.

This morning we see the February TTF contract at €61, NO CHANGE to the previous settlement. 

A quick check on some key contracts:
Curve TTF February €61, Summer €63 (vs €61 and €63)
Curve NBP February 153p, Summer 157p (vs 154p and 159p)
UK Gas NBP spot 155p (from 154p).
UK Power DA £163 (from £155).

UK power prices show the UK February Baseload contract at £158(£156) and Summer at £154 (£155).

In other areas of the market Brent Oil is at $86 ($85) and EUAs are at €84 (€83). Henry Hub is at $3.28 ($3.31) and JKM is at $22.95 ($23.09).

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