Carbon EUAs closed 1.6% down on Friday

 Carbon EUAs eased for the second day running

After a week of volatile trading in the UK gas markets, there was a bearish sentiment on Friday as temperatures are forecast to remain above normal for the next week or so while carbon EUAs eased for the second day running.  Prompt prices were pressured from the get-go, as the spot and day ahead products shed between 2.50p and 3.50p responding to the system comfort and lower demand forecasts.  The sharp losses in NBP futures seen on Thursday were consolidated on Friday as contracts settled an average of 0.65p lower.  Over the week NBP futures were 0.35p higher on average.  

Significant losses at the front of the power curve

Lower gas prices combined with declines seen in the carbon markets to pressure GB baseload power contracts on Friday.  There were significant losses at the front of the power curve with the lead month, June shedding £1.72/MWh on the final day of trading for the contract. Losses to contracts from the winter out were more modest on the day, averaging just £0.35/MWh. Prompt prices for baseload power also fell on Friday as wind generation looks set to increase for the week ahead.  Baseload for the day ahead (Tuesday’s price) shed £11.37/MWh to settle at £73.00/MWh. Carbon EUAs closed 1.6% down on Friday with the spot closing at €50.95 per tonne.

Brent only gained 16 cents a barrel on Friday

The prospect of a lifting of sanctions on Iran along with rising infection rates across Asia, countered positive economic data from the U.S. on Friday as the markets closed mixed.  The number of unemployed Americans claiming benefit fell to the lowest level since the pandemic began, indicating the workforce is returning as vaccine rollout progresses.  Officials from the U.S. and Iran are to meet for a fifth time this week in Vienna to discuss Iran’s nuclear plan. The possibility of removing sanctions is real and could lead to a further 1.5m barrels per day being added to the market over a few months. While Brent only gained 16 cents a barrel on Friday, West Texas Intermediate closed 53 cents a barrel down.  

Bank holiday in the UK today the gas markets will remain closed for the day

With today being a bank holiday in the UK the gas markets will remain closed for the day.  Gas demand is down at 135MCM and it is no surprise that the system is well balanced.  LNG send out is 42MCM for today while imports from Norway are nominated at 58MCM.  It is also a federal holiday in the U.S., but the oil markets are trading on-line with August, the new front month for Brent last exchanging at $69.47, up 74 cents a barrel, while West Texas Intermediate is 73 cents higher at $67.05 a barrel.