EUA carbon contracts posted gains to bring new record highs

02 July 2021

 Gas trading condition remained the same on Thursday

Gas trading condition remained the same on Thursday as they were for the previous two sessions with the NBP market opening with significant strength and prices gapping higher as a result.  The increase in gas prices is not limited to just the UK market as all the major hubs across Western Europe experience the same dynamic.  The front month August contract traded at a high of 91.90p at one stage and then fell to a low of 88.00p, a swing of 3.90p.  At settlement this contract was priced at a record high of 89.58p, up by 3.71p from the previous close.  Gas contracts out to Winter 2021 posted gains of 3.78p on average while spot gas prices reached 91.95p per therm.

 Fifth session in a row the power market added significant premium

GB baseload power futures contracts continued to track gas, coal and carbon markets higher as for the fifth session in a row the power market added significant premium. on the plus side there was some narrowing on spark spreads as the minimum supply margin improved but this did little to outweigh the movement in commodities. EUA carbon contracts posted gains of €1.40 to bring all periods to new record highs.  The spot EUA contract is now priced at €57.92 per tonne.  The day ahead baseload price for July continued to firm as a further £3.95 was added and this contract closed at £92.30/MWh.  

 Brent crude contracts pushed higher

The lackluster crude oil market of the last few days disappeared yesterday as prices for the Brent crude and West Texas intermediate contracts began to push higher. Recent data from the U.S. Energy Information Administration indicated a drop of 8.2 million barrels in inventories although gasoline stocks showed a build.  The market is not a one way bet by any means as the incidence of the Delta variant of coronavirus grows across the globe and new restrictions and lockdowns are implemented.  OPEC continue to warn of a potential glut by the end of this year and this is also providing a cap on prices  

UK NBP market has opened weaker this morning

After three sessions of strong gains the UK NBP market has opened weaker this morning and all contracts that have traded have given up premium.  There is no change in the overall fundamental picture and the same issues that were driving the market higher in recent days remain.  That said, it would appear that the market in not inclined to go any further, at least for the present.  Gains added in the last three session remain, but contracts are in decline by between 2.00p and 3.00p. EUA carbon contracts have posted some modest losses in the early part of the session but contracts remain elevated, nonetheless.  The brent crude contract is trading lower by 17 cents at $75.67 a barrel.