The sharp step up in gas futures on Thursday boosted baseload futures.
11 December 2020
A spell of persistent colder weather in Asia was given as the cause for the large step up in gas pricesA spell of persistent colder weather in Asia was given as the cause for the large step up in gas prices on the NBP on Thursday. Increased gas demand there has lifted the Japanese Korean Marker, and this has added a premium to Asian LNG prices which could see LNG cargoes diverted away from Europe. The U.S. Henry Hub also rose sharply yesterday aided by a report from the EIA which showed a large draw on U.S. gas reserves last week. NPB futures closed over 2.50p higher at the front of the curve, while the front seasonal contracts settled just over 2.00p higher. The strong gains in gas futures lifted the prompt yesterday even though the outlook is for milder temperatures next week and the UK gas system was well balanced yesterday.
The sharp step up in gas futures combined with higher crude oil and carbon prices on Thursday to boost baseload futures. The near months averaged gains of £1.50/MWh, while gains further out were not as strong. Carbon EUAs rose by around 4.0% yesterday with the spot settling at €30.90 per tonne. An outage on the link between the UK and The Netherlands coupled with forecasts for lower wind generation saw the day ahead baseload contract reverse some of the previous session’s losses and settle at £73.16/MWh. The 1.0GW interconnector is expected to be down until the end of the year.
Carbon EUAs rose by around 4.0% yesterday