The recent volatility on the carbon market looks set to continue

Prompt and near futures gas prices at the NBP eased significantly

  Prompt and near futures gas prices at the NBP eased significantly again on Friday following Thursday’s slump in oil prices. A combination of high gas-fired power demand and restricted Norwegian supply-maintained pressure on the UK gas system throughout the day but the system remained marginally long throughout as LNG send-out ran at over 100MCM. The front month shed 1.41p and finished almost 10% lower week-on-week. Brent crude gained $1.25 on the day but was still down by almost $5.00 week-on-week while West Texas gained by a similar amount to settle at $61.42 a barrel.

GB baseload power futures fell for a fourth day

GB baseload power futures fell for a fourth day in five on Friday as gas and carbon prices eased on the day. The ongoing volatility in the carbon market continues to impact power prices right along the curve. The strong gas supply situation as we near the end of the winter season is helping to maintain downward pressure on power prices, however. Day ahead power eased despite forecast weak wind generation again today while the week ahead contract for this week also eased. Wind generation is forecast to pick up from today and remain at higher levels for the rest of this week.

 A 5-day run of losses on the oil market, was halted on Friday

A 5-day run of losses on the oil market, which culminated with Thursday’s slump of $4.72 a barrel, was halted on Friday. Brent crude gained $1.25 on the day but was still down by almost $5.00 week-on-week. West Texas gained by a similar amount on Friday to settle at $61.42 a barrel. The upward turn was partly a response to a bad start to the first meeting of senior U.S. and Chinese envoys since the Biden administration took office. Most market drivers remained bearish however with demand recovery in Europe stalled by a new surge in coronavirus cases and last week’s IEA report suggesting global demand recovery this year would be slower than previously predicted.  

  UK gas system is running 20MCM below the seasonal norm

Demand on the UK gas system is running 20MCM below the seasonal norm this morning and the system is currently forecast 6MCM long. LNG continues to supply almost 100MCM, or 40% of current demand. Wind generation has increased slightly but remains relatively weak. Within day and day ahead gas prices have risen slightly in early trading while the front month is also up fractionally. Crude oil is trading down again with Brent currently marked up at $64.19 a barrel. The recent volatility on the carbon market looks set to continue with EU ETS unit prices reversing Friday’s losses in early trading this morning.