EU carbon allowances gained

 UK gas market was in bullish mode

The week began with similar volatility to last Monday, but the UK gas market was in bullish mode yesterday.  Near futures gas contracts gained almost 5% on the day with some mid-winter months hitting 95.00p.  The front month gained 4.55p to settle at 92.99p while the full winter 21 contract settled at 95.75p.  An early supply deficit on the UK gas system was recovered by midday and the system finished with a healthy surplus.  The supply demand situation on the day held little or no sway on the market however as concerns for LNG deliveries and winter storage levels dominated market sentiment.  

  GB baseload power prices gained strongly

GB baseload power prices for the coming 8 months gained strongly on Monday as gas and carbon prices surged. The front month gained £3.75 and Q4 21 £3.05 to settle at £97.55/MWh.  EU carbon allowances gained €2.25 per tonne in a strong rebound from Friday. Day ahead baseload gained £4.50 to top £100.00/MWh as gas and carbon prices surged and wind availability is forecast to remain low.  Wind generation for today is forecast t just over 1GW but solar generation has fallen off to just 0.70GW this morning.  

 The oil market remained stable

The oil market remained stable with a continuation of the gradual recovery from last Monday’s drop of $5.00 a barrel.  Brent crude gained 40 cents to settle at $74.50 while EU carbon emissions allowances jumped by €2.25 per tonne yesterday.  Oil market traders remain optimistic that rising demand will match or outpace increased OPEC production for the remainder of the year.  The increase in coronavirus cases in Asia restrained any significant gains but a weaker dollar and expectations of a decline in U.S. stock levels eventually saw prices move higher by the close of trading yesterday.

 

GB gas system in better shape this morning

The GB gas system looks to be in better shape this morning with National Grid forecasting a modest surplus for today against a demand of 128MCM.  Concerns of tight supplies remain heightened however, as LNG send out remains muted while elevated prices in Asia continue to attract cargoes to the East and storage gas reserves in the UK are around 25% of levels held at this time last year.  Near futures on the NBP have opened sharply again this morning with the front month last trading 2.50p higher while the prompt has been slow.  Crude oil prices have continued to firm with both Brent and West Texas around 25 cents a barrel up on last nights close.