Carbon prices gained strongly on Monday with EU ETS unit prices reaching 8-week highs

17 November 2020

 Spot and day ahead contracts gained slightly

Lower wind availability and higher gas-fired generation saw demand on the UK gas system increase to 220MCM on Monday, still over 50MCM below the seasonal norm. An early supply surplus if 15MCM fell off to leave the system forecast 5MCM short at close of business. Spot and day ahead contracts gained slightly as the supply-demand balance turned negative. Week ahead and front month contracts recorded gains of 1.15p and 0.92p on forecast colder weather ahead. While contracts right along the curve recorded gains, movement beyond the current winter months was marginal.  

 GB baseload power futures moved higher on Monday

GB baseload power futures moved higher on Monday as energy and particularly carbon prices increased on the day. The front month contract gained just over £1.00/MWh and contracts for the remaining winter month were up by £0.90/MWh. The day ahead contract gained £3.00/MWh despite forecast higher wind generation for today and the rest of this week.

U.S. share prices and energy commodities saw a late rally

U.S. share prices and energy commodities saw a late rally following the announcement of a second viable Covid-19 vaccine on Monday. NYMEX crude benchmark, West Texas Intermediate, gained $1.21 to settle at $41.34 while the global benchmark, Brent crude, gained $1.04 to settle at $43.82 a barrel. News of a highly effective vaccine from Moderna Inc. helped overcome the negative effect of the current surge in Covid cases, offering hope of a return to more normal economic activity next year, even if human activity may still be subject to restrictions. Carbon prices gained strongly on Monday also with EU ETS unit prices reaching 8-week highs of over €27.00 per tonne.  

Gas prices at the NBP have fallen in early trading this morning

As wind generation levels increased overnight, demand on the UK gas system has fallen to just 187MCM, almost 100MCM below the seasonal norm. The system is currently forecast 20MCM long and gas prices at the NBP have fallen in early trading this morning. The spot price is down 1.15p and the front month contract for December is down 1.19p to 40.00p. Yesterday’s news of a second Covid-19 vaccine boosted oil prices but the momentum has ceased and Brent crude is down fractionally overnight. Carbon prices are up slightly with EU ETS unit prices approaching €28.00 per tonne.