Carbon prices continued to edge higher

 Prompt gas prices at the NBP surged

The UK gas system was again comfortably supplied with demand just over 150MCM and supply outstripped demand by an average of 5MCM throughout the trading day.  In an unusual phenomenon, for this time of year, storage withdrawals ramped up to almost match injection on the day as storage holders sold into an over-heated market.  Prompt gas prices at the NBP surged by an average of 4.00p despite the well supplied system.  Prices for the current summer months broke through the 80.00p mark for the first time with the front month expiring at 82.79p and Q3 at 82.50p on concerns for Russian supplies to Western Europe.  The winter 2021 contract gained 3.10p to settle at 89.00p.  

 Carbon prices continued to edge higher on the day

GB baseload futures contracts for the coming 9 months tracked gas prices higher with gains of over £2.00/MWh yesterday.  The increases were common to most Western European power markets following the surge in gas prices yesterday.  Carbon prices continued to edge higher on the day. The day ahead gained £6 to finish at £86.00/MWh or over €100/MWh for the fourth time in the past 10 days.  Renewable generation exceeded forecast levels yesterday but was forecast lower again for today with solar generation falling off.

 Monday’s reversal of recent gains in oil prices paused on Tuesday

Monday’s reversal of recent gains in oil prices paused on Tuesday as Brent crude gained 8 cents to settle at $74.76 while carbon prices continued to edge higher.  The market has steadied ahead of the OPEC meeting later this week.  It is now widely anticipated that OPEC output will be increased by half a million barrels by August and that this will not lead to over-supply as demand increases with easing of lockdown in many parts of the world.  What may trigger a fresh imbalance in the supply-demand situation is if the current Iran-U.S. talks result in the lifting of sanctions on Iranian oil exports.  Exchange rates remained stable again yesterday.

Crude oil has fallen by 33 cents overnight

Demand on the UK gas system has fallen to just 136MCM this morning.  The system remains well-supplied despite the cessation of interconnector imports as Belgian and Dutch prices move higher again today, erasing any premium the UK market was offering.  Prompt gas contracts have yet to trade but bid-offer spreads suggest at least a penny increase here while the new front month contract for August is also up by a penny.  Crude oil has fallen by 33 cents overnight with Brent currently marked up at $73.43 but carbon prices continue to edge higher with prices for this year and 2022 nearing €56.00 per tonne.