After 5 days in decline, carbon prices bounced strongly to trade above €25.00 per tonne again

26 October 2020

Trading on the prompt gas market was muted on Friday

 The UK gas market finished the week on the up with contracts for the current winter months gaining 0.60p on average and finishing around 5% higher week-on-week. The full year 2021 contract price moved above 40.00p for the first time since January. Movement on seasonal contracts for 2022 and beyond was mixed with only minor gains and losses on the day and over the week. An early supply surplus of 12MCM was pared back as demand increased over the course of the day with rising gas-fired power demand. Trading on the prompt gas market was muted on Friday with the day ahead and week ahead gaining just 0.20p and 0.30p respectively.  

GB power futures recorded strong gains for a second consecutive day

GB power futures recorded strong gains for a second consecutive day as gas prices increased and carbon rebounded strongly from recent lows. Near futures contracts saw the biggest gains but seasonal contracts out to 2022 were up by an average of £0.75/MWh. After 5 days in decline, carbon prices bounced strongly to trade above €25.00 per tonne again. The day ahead baseload contract shed £2.00/MWh as wind generation was forecast higher for today. The full week ahead contract for this week gained £0.75/MWh however as the availability of consistent wind generation was in doubt.    

Carbon prices bounced back strongly from 4-month lows

Thursday’s gains on the oil market were reversed on Friday with a sudden increase in Libyan oil production boosting supply and widening lockdown measures stymying demand. Brent crude shed 69 cents to settle at $41.77, down $1.16 a barrel week-on-week. West Texas Intermediate was down 75 cents to $39.85 a barrel. The U.S. benchmark was under additional pressure with the failure of the U.S. Government to implement a fresh economic stimulus package. After 5 day in decline, carbon prices bounced back strongly from 4-month lows to trade above €25.00 per tonne again.    

Crude oil is continuing to ease with Brent trading almost a dollar lower

With wind generation picking up across the UK and Ireland this morning, gas demand is falling. The system is currently forecast 5MCM long against a forecast demand of 232MCM, just under the seasonal norm. As is usual for a Monday, trading has been slow to start on the gas market with only the spot price having traded so far. Within day gas is down 0.80p on Friday’s closing level while the front month has shed 0.87p to currently trade at 42.75p. Crude oil is continuing to ease with Brent trading almost a dollar lower at $40.87 a barrel.