Carbon prices continue to strengthen
08 June 2021
Rising carbon prices led UK gas and power prices higherDespite low demand and a strong supply surplus on the day, prompt and near futures gas prices at the NBP recorded significant gains on Monday. Concerns are rising that low storage volumes will require high injection demand over the summer maintenance period and stretch into the early winter period. Norwegian maintenance is expected to be at its most intense later this week and will continue into July. With little other price pressure, rising carbon prices led UK gas and power prices higher following some softening of prices through the second half of last week. The prompt was up by 1.40p while near futures recorded average gains of 1.85p.
GB baseload power futures moved higherGB baseload power futures moved higher in line with gas and carbon prices with Q3 up by £0.90/MWh and Q4 by £1.65/MWh. EU ETS unit prices gained €1.50 per tonne on Monday but UKA’s gained only half that amount. Pressure on the power futures market is set to continue as gas injection rates ramp up and Norwegian gas deliveries are restricted. The day ahead price shed £2.85/MWh with the Brit-Ned interconnector returning to service and wind generation forecast slightly higher today. With temperatures forecast at or above normal for the remainder of the month, pressure on the power prompt should ease.
Crude oil prices eased on Monday as the recent rally ran out of steam on concerns that Iranian exports could double if U.S. sanctions are lifted. Brent crude and West Texas Intermediate both shed 48 cents to settle at $71.41 and $69.14 respectively. The recent bullish mood on the market has been tempered by the prospect of an agreement between the U.S. and Iran and this prospect seems to be nearing reality as the two countries continue negotiations later this week. Crude remains at near 2-year highs however as demand recovers slowly with the lifting of restrictions in countries where coronavirus vaccine roll-out has been effective.
Crude oil prices eased on Monday