GB power futures recorded significant gains again

 The supply demand balance is expected to stay tight due to unseasonably cold temperatures

UK NBP gas prices remained elevated on Thursday and added further premium during the course of the day with prices for the coming winter recording gains of over a penny.  With unseasonably cold temperatures being forecast over most of Western Europe for the next week or so, the supply demand balance is expected to stay tight.  The gas system operated with a supply deficit of between 5 and 15MCM throughout the trading day yesterday and prompt gas prices rose sharply, the spot price gained almost 3.00p while the day ahead was up by 2.55p and the week ahead by 1.30p.  

 Carbon EUAs hit new record highs

GB power futures recorded significant gains again on Thursday as gas and carbon prices continued to strengthen.  Prices for the coming 12 months gained an average of £1.45/MWh. Carbon EUAs hit new record highs as contracts for 2022 and 2023 settled at €50.41 and €51.24 per tonne respectively. On the power prompt, the day ahead contract gained a further £3.00 to £76.50/MWh as wind generation is forecast to slip to just 2GW today.  With temperatures remaining below average and interconnector supplies from France and the Netherlands restricted, the system remains tight.    

Crude oil market had been trading near a two-month high

Crude oil prices moved into decline during Thursday’s session as the market once again showed some signs of anxiety over global demand recovery.  The crude oil market had been trading near a two-month high in recent weeks as optimism pervaded the market regarding economic recovery and increased oil demand.  This prospect has turned out to be less well founded and there are clear concerns that demand recovery will not come to pass in the near term, at least.  Added to this is the recent decision of the OPEC led group to begin increasing production.  The net result for oil prices on Thursday was a day-on-day decline of 46 cents with Brent settling at $68.09 a barrel.    

Demand on the UK gas system is slightly down on yesterday’s levels

Demand on the UK gas system is slightly down on yesterday’s levels despite lower wind generation today.  The system is better balanced than of late with the Bacton-Zeebrugge interconnector operating in import mode this morning.  Prompt gas contracts have yet to trade but the front month is down 0.85p and Winter 2021 is down 0.64p as one of the recent upward drivers has eased with carbon prices falling slightly overnight.  EU ETS unit prices are down by 30 cents with the December 21 price currently at €49.63 per tonne.  Crude oil has also eased fractionally overnight as Brent trades at $68.00 a barrel.