Record day-on-day gains in carbon EUAs

 Gas futures recorded average gains of over a penny

Temperatures fell back below seasonal levels on Wednesday and with wind generation falling below 2GW, demand on the UK gas system rose to 195MCM.  Solid deliveries levels of 200MCM maintained a supply surplus throughout the trading day but the recent bullishness on the prompt gas market continued with contracts gaining over 1.00p on average.  Gas futures also recorded average gains of over a penny along the curve. The Winter 21 contract is now trading above 70.00p and holding a premium of over 20% on Winter 22.

 Carbon EUAs settled above €55.00 per tonne

Record day-on-day gains in carbon EUAs pushed base load futures higher yesterday as power contracts recorded sharp gains for the third straight day. The front month added £1.60/MWh to close at £75.00/MWh.  Prompt prices also picked up with wind generation expected to decline further today and tomorrow. The day ahead product settled £3.67 up at £84.00/MWh. Carbon EUAs settled above €55.00 per tonne on Wednesday after the latest auction was flooded by investor activity.  Contracts out to 2023 climbed over 4.3% or around €2.30 per tonne to post the largest day-on-day since the market was established.  

 Fuel shortages began to emerge in some States

With the ongoing shut-down of the Colonial Pipeline, fuel shortages began to emerge in some States and U.S. crude gained 80 cents to settle at $66.08 a barrel while gasoline prices hit 3-year highs in North-Eastern States.  Brent settled 77 cents higher to close at $69.32 a barrel yesterday on optimistic forecasts from OPEC for demand growth in the second half of the year.  Crude prices were also supported by weekly inventory data from the States showing a decline in crude stocks.  Carbon prices recorded the biggest day-on-day rise since the market was established as EUA unit prices move above the €55.00 per tonne mark.  

Carbon is again the main price driver for the gas market

Demand on the UK gas system is unchanged from yesterday’s level of 190MCM which is in line with the seasonal norm.  Wind generation has fallen to just 1.5GW but the system is again forecast marginally long, and prompt gas prices have eased with the spot price down 0.80p to 66.50p.  The front month contract is down by almost 2.00p and early trading on contracts further out the curve show sharp losses also.  Carbon is again the main price driver for the gas market as EU ETS unit prices have retraced yesterday’s gains to currently trade around the €54.00 mark.  Crude oil prices have also declined overnight with Brent down $1.50 to $67.82.