EU confirmed its target of 55% reduction in emissions by 2030
13 July 2021
The recent volatility on the UK gas market is likely to continueWith the UK gas supply outlook not looking any better for the remaining summer months, the recent volatility on the UK gas market is likely to continue while carbon prices fluctuate as they have been of late. The longer-term supply outlook is reflected in the relative stability of prices beyond the front winter with Nordstream 2 coming on-line. The volatility on European gas markets which was so much in evidence last week continued as prompt and near futures gas prices at the NBP moved significantly lower yesterday. Carbon emission prices were to the fore in leading gas prices lower as EU ETS unit prices shed €2.20 per tonne. Prompt prices fell by an average of 6.00p while futures contracts for the coming 9 months shed an average of 5.50p.
GB power futures fell back on MondayGB power futures fell back on Monday reflecting losses on the gas and carbon markets on the day. While near futures contracts tracked gas market losses closely, contracts further out the curve saw more significant losses than their gas counterparts due to the heavy losses in carbon. The day ahead shed £3.75/MWh on lower gas prices and forecast improved renewable generation for today. Renewable generation contributed just under 2GW yesterday and is forecast to exceed 4GW today.
Crude oil prices eased on Monday, continuing the recent see-saw pattern of price movement around the $75.00 mark. Brent crude fell by 39 cents to settle at $75.16 a barrel. The market is weighing increased demand in the U.S. and Europe as strong vaccination roll-out allows economies to reopen against a worrying resurgence of Covid-19 cases in Asia. The overall positive demand outlook for oil was tempered by uncertainty over carbon pricing as the EU confirmed its target of 55% reduction in emissions by 2030. Measures to achieve this will include curbing the dependence on oil and gas with new carbon taxation measures to be announced this week.
Crude oil prices eased on Monday