Carbon EUAs added around €1.55 per tonne yesterday

Volatility returned to the UK gas markets on Thursday

Volatility returned to the UK gas markets on Thursday with futures flipping between losses and gains all morning until the market finally started to rack up some momentum to settle an average of 0.75p higher.  Gains would have been stronger on the day but were partially reversed just before the close after an announcement from Nord-Stream 2 which said pre-commissioning work would start today on the new underwater gas pipeline from Russia to Germany.  Prompt prices settled higher for the most part with a tight gas system providing support to the spot which settled 0.80p higher at 69.55p.

The sharp gains in carbon EUAs and gas futures fed into the baseload power curve

The sharp gains in carbon EUAs and gas futures fed into the baseload power curve on Thursday afternoon after prices had remained flat earlier.  The front month closed £0.50/MWh up on the day which was above the average gain for the curve. Carbon EUAs added around €1.55 per tonne with the spot settling at €53.69 per tonne. Forecasts for wind generation to increase today pressured the day ahead contract yesterday.  Wind is now forecast to average close to 9.0GW on Friday up from around 7.5GW for Thursday.  Baseload for the day ahead closed at £69.56/MWh falling by £2.78 from the previous close.

Iran could add around 1.5m barrels of crude per day to the market

Crude oil prices dipped during the session after media reports of a lifting of sanctions on Iranian officials was misinterpreted as sanctions be lifted on Iranian oil.  The markets recovered quickly, and Brent settled 67 cents a barrel higher while West Texas Intermediate settled at $70.29, up 33 cents a barrel. The misunderstanding was later cleared up by the U.S. Treasury who stated sanctions had been removed from three former Iranian officials attached to two petrochemical products and was not related to the talks with Iran.  Iran could add around 1.5m barrels of crude per day to the market if sanctions were to be lifted following successful negotiations for a nuclear deal.

The GB gas system is finely balanced this morning

After yesterday’s late decline in NBP futures the market has opened softer this morning with the front month down a half a penny in early exchanges.  Very little has traded further along the curve, but the winter contract is 0.38p lower at 77.80p.  Prompt prices are as yet unchanged with wide bid/ offer spreads preventing early activity.  The GB gas system is finely balanced this morning with supplies matching the demand at 138MCM.  Nominations from Norway are at 76MCM for today while LNG send out is over 40MCM.  Brent continues to trade at a two-year high and is currently 20 cents a barrel up at $72.72 a barrel