Leaked EU report suggesting even higher target prices for emissions
29 June 2021
Prompt gas prices recorded more significant lossesFollowing last week’s uninterrupted daily run of gains on the UK gas market, prices eased marginally on Monday as crude oil relinquished all of last week’s gains, shedding $1.50 a barrel on the day. This was somewhat encouraging given that carbon prices recorded further gains on the day. The UK gas system was comfortably supplied with demand just under 150MCM despite increased storage injection demand and low wind power generation. Prompt gas prices recorded more significant losses with the spot price down by 2.25p and day ahead by 2.30p. The week ahead fell by 0.70p to align with the July contract.
GB baseload futures moved marginally higherGB baseload futures moved marginally higher on Monday as carbon edged higher again and Winter 21 settled at £91.00/MWh. The modest decline in gas prices was over-shadowed by the carbon market and a leaked EU report suggesting even higher target prices for emissions for 2030. The day ahead settled lower at £80.00/MWh, but intra-day prices hit £200/MWh on tight system margins. Renewable generation was forecast to total just 3GW today with wind generation expected to remain weak for the rest of the week.
The modest but steady gains in crude oil prices which saw Brent finish at a 30-month high of $76.18 on Friday were relinquished on Monday as the global benchmark shed $1.50 to settle at $74.68 a barrel yesterday. Demand is increasing at a faster rate than predicted with the lifting of restrictions in more countries. Even in Covid-ravaged India, the demand is up, and that country is pressuring OPEC to increase production in hopes of prices easing. OPEC meet later this week to consider easing production quotas and it is now widely anticipated that output will be increased by half a million barrels by August. The recent strengthening of the dollar has ceased, and exchange rates have stabilised.
Demand is increasing at a faster rate than predicted