Carbon prices continue to rise, gaining a further 75 cent this morning

 Front month finished unchanged day-on-day; most other futures contracts recorded marginal gains.

UK gas futures opened lower yesterday morning, suggesting a reversal of the recent rally which has seen prices climb for 5 consecutive days.  The reversal was short-lived however and while the front month finished unchanged day-on-day, most other futures contracts recorded further marginal gains.  Demand on the gas system was marginally below the seasonal norm and the system maintained a supply surplus of around 10MCM throughout the trading day with strong LNG send-out helping the supply side.  Despite the comfortable supply-demand balance, within day gas gained 1.20p while other prompt contracts were up marginally day-on-day.    

GB baseload power futures ran up gains exceeding gas market movement

GB baseload power futures ran up gains exceeding gas market movement as carbon prices stepped higher again on Wednesday.  Higher emissions reduction targets for 2030 have been agreed by the EU and EU ETS unit prices gained over €1.50 per tonne to settle at new record highs of between €45.90 and €46.95 per tonne.  The UK has also set a more ambitious target to achieve 78% emission reductions (compared to 1990 levels) by 2035.  The day ahead contract gained as wind generation is forecast below 2GW today, having topped 4GW yesterday.  The week ahead contract was up by £1.00/MWh as wind is forecast to remain weak to the end of the month.      

 Crude oil prices fell on fears of U.S. legal action against OPEC

Crude oil prices fell on fears of U.S. legal action against OPEC and an unexpected increase in crude stocks in the U.S. last week.  A big drop in gasoline stocks, indicative of increasing demand in the U.S. was over-looked as the market focused more on the deteriorating situation regarding Covid-19 cases in India.  India is the third largest importer of crude oil globally and the prospect of intensified restrictions which would affect demand were enough to reverse some of the recent gains in oil prices on the international markets.  Carbon prices hit new record highs with EU ETS prices finishing in a range between €45.90 and €46.95 per tonne.          

 Yesterday’s slippage in oil prices has continued overnight

  With demand on the UK gas system running at normal levels for this time of year, the system remains well-supplied and is forecast 6MCM long for today.  Norwegian deliveries are slightly subdued as summer maintenance programmes have commenced but LNG send-out continues at around 80MCM, providing over 33% of current supply.  Prompt gas contracts have yet to trade but the front month has gained 1.00p in early trading and Winter 21 is up by 0.40p.  Yesterday’s slippage in oil prices has continued overnight with Brent down a further 54 cents to currently trade below $65.00 a barrel.  Carbon prices continue to rise, gaining a further 75 cent this morning.