EU ETS unit prices settled at 8-day low

 European gas prices fell for a third consecutive session on Friday

European gas prices fell for a third consecutive session on Friday as Asian LNG prices fell by 25% over the period. Prompt gas prices at the NBP fell by 5.25p to 6.25p on lower demand and a well-supplied system on the day. Despite the dramatic gains on the UK gas futures market on Monday and Tuesday, the sharp reversal since Wednesday has left futures prices lower week-on-week across the board. The front month contract fell below 60.00p for the first time in 6 days and Q2 was down 2.02p week-on-week, settling at 42.58p on Friday.  

GB day ahead baseload power price fell back to more normal levels on Friday

Lower demand and widening supply margins saw the GB day ahead baseload power price fall back to more normal levels on Friday. The day ahead price, which has peaked at over £200/MWh following a supply margin alert on Thursday, fell back to $65.40/MWh on Friday and week ahead baseload dropped to £67.00/MWh. Baseload futures eased by an average of £1.22/MWh on Friday as the market tracked gas and carbon prices lower. The front month shed £3.60 but remained just above £70.00/MWh. Losses on contracts further out the curve were less significant but reflected falling gas and carbon on the day.  

Crude oil prices fell on Friday as the dollar strengthened slightly

Crude oil prices fell on Friday as the dollar strengthened slightly and the prospect of prolonged weak demand seemed more likely. Brent crude shed $1.32 to settle at $55.10 while West Texas Intermediate was down $1.20 to $52.36 a barrel. The fall off came despite a big increase in Chinese imports of crude oil in recent weeks. The surge in Chinese imports is seen as a response to buying signals rather than any significant increase in demand. Other major economies continue to see depressed demand as Covid restriction continue or are extended. On the carbon market, EU ETS unit prices shed €1.80 per tonne to settle at 8-day lows of €31.74 to €32.31 per tonne.  

Demand on the UK gas system is forecast exactly in line with the seasonal norm for today

Demand on the UK gas system is forecast exactly in line with the seasonal norm for today. The system is currently well-supplied and linepack is forecast 16MCM long. Softening LNG prices are helping to undo the heavy premium added to European gas prices over the past 2 weeks. The UK front month contract has shed a further 3.85p in early trading today and Summer 21 is down by almost a penny. An overnight dip in crude oil prices has been recovered and Brent crude is trading 5 cents up on Friday’s closing level at $55.15. Friday’s heavy losses on the carbon market have been stemmed and EU ETS unit prices are up fractionally this morning.