UK gas prices gained for a second consecutive day

Prompt gas prices were little changed as the UK gas system remained well-supplied on Friday

With Brexit negotiations on a knife edge and little sign of a break-through, sterling weakened further on Friday. UK gas prices gained for a second consecutive day as a result, with the Calendar Year 2021 contract topping 40.00p for the first time in 11 months. The Q1 2021 contract gained 1.33p on the day, up almost 10% week-on-week. Seasonal contracts for Summer 2021 and beyond gained an average of 0.75p. Prompt gas prices were little changed as the UK gas system remained well-supplied on Friday  

Carbon prices eased on the day

GB baseload futures recorded further gains on Friday leaving prices between £1.00 and £3.55 higher week-on-week. The January contract gained just £0.50 but the full Q1 21 contract was up by £1.00/MWh. Carbon prices eased on the day, but EU ETS unit prices remained between €30.50 and €31.00 per tonne. On the prompt market, day ahead and week ahead contracts moved lower on forecast milder weather and higher wind generation levels. The expected lower demand will see wind take a greater slice of the power stack with less reliance on gas-fired plant  

 Crude oil failed to sustain the recent rally which saw Brent settle above $50.00 a barrel on Thursday

Crude oil failed to sustain the recent rally which saw Brent settle above $50.00 a barrel on Thursday. The global benchmark slipped by 28 cents to settle at $49.97 on Friday, just 72 cents higher week-on-week. The recent rally, which saw prices gain almost $10.00 since the beginning of Q4, stalled as the market gauges demand destruction due to Covid-19 lockdowns against possible demand revival as vaccination is rolled out. The U.S. benchmark, West Texas Intermediate, also saw a slight decline on Friday as fresh lockdown measures came into effect in populous areas like California and New York city.  

Gas futures at the UK NBP continue to strengthen

As temperatures rose and wind generation picked up, demand on the UK gas system fell below 250MCM over the weekend. With demand forecast at 258 MCM this morning, line-pack is forecast to increase by 16MCM. Brexit negotiations continue and with some more optimism that a deal will be struck, the pound has recovered a little in early trading this morning. Gas futures at the UK NBP continue to strengthen however with the front month up by almost a penny. Crude oil and carbon markets are also in bullish mode this morning. Brent crude is up 50 cents to $50.48 while EU ETS unit prices are trading above €31.00 per tonne.