Losses on the EUA carbon market were the most significant that we have seen in the recent past

19 May 2021

 UK NBP gave significant premium on Tuesday

Following the recent significant bull run on gas markets the UK NBP gave significant premium on Tuesday, the second day in a row that markets had gone lower.  the losses during yesterday’s market were significant and grew as the day progressed and the sell off intensified.  Losses on the EUA carbon market were the most significant that we have seen in the recent past and with the new UK ETS market holding its first auction on Wednesday, there is no doubt the broader market had its eye on this.  At settlement, the from month June contract was down by over 4.03p as this contract settled at 63.20p per therm while Winter 2021 was priced at 68.53p, 3.81 lower than the previous settlement.  

GB power futures eased for the second session in a row

GB power futures eased for the second session in a row as carbon and gas prices experienced a significant sell off.   December 2021 EUA’s lost over 5% during the session and settled at €53.07 per tonne.  With the first UK ETS auction scheduled for Wednesday, it is likely that UK players are selling their EUAs. The front month baseload contract shed £1.98, and Winter 2021 was down by £3.42/MWh at £79.33/MWh as lower input costs impacted.   The day ahead baseload power fell by £2.63 to £81.00/MWh.  Despite these falls the market remains elevated and coming days will tell if prices retrace to more normal levels.  

Crude oil fell to a low of $68.63 at one point yesterday

After moving higher for the last number of sessions, the crude oil market pulled away from pushing through the psychologically important point that is $70 a barrel.  Brent crude traded over this point briefly during the day as the market peaked at €70.24.  The additional premium was not sustained, and crude fell to a low of $68.63 at one point.  The market seems reluctant to go beyond the $70 mark and not for the first time has it failed to breach this barrier.  Many market participants are remaining cautious as some global economies return to normality while others still suffer under Covid outbreaks.  With new U.S. inventory data due on Wednesday, we may see some new short-term direction established.  

Yesterday’s sell-off on gas and carbon markets is continuing this morning

Yesterday’s sell-off on gas and carbon markets is continuing this morning and both markets have opened softer as contracts continue to give up premium.  Spot EUA carbon contracts are down by a €1.08 and are changing hands at €51.84 per tonne.  UK NBP gas contracts are under significant pressure and are extending losses for the third session in a row.  The front month June contract is down by a further 2.29p as it trades at 60.91p per therm.  Winter 2021 is priced at 67.20p, down by 1.33p from last night’s close.  It is becoming obvious that the significant premium built up over the last number of weeks is no longer sustainable.  On crude oil markets, Brent is priced at $67.63, down by $1.08.