Early lift in UK gas prices on Monday morning was reversed
Increased flows of Russian gas via the Yamal pipeline yesterday gave rise to optimism that recent restrictions on that line due to upstream problems have been resolved. A fire at a compression station on one of the main supply points to the Yamal line has restricted flows for almost a month but that issue now appears to be resolved, although no official confirmation was forthcoming from Gazprom. An early lift in UK gas prices on Monday morning was reversed as the day progressed and near futures contracts fell by 0.67p to 1.55p in the least volatile trading session in over a week. The optimism over increasing Russian supply was tempered by rising oil and carbon prices which helped limit gas price losses on the day.
Carbon prices on the day as EU ETS unit prices gained
GB baseload power prices, apart from the front month, recorded modest gains on Monday with Winter 21 up by £1.25/MWh. The September contract eased marginally but all remaining futures contracts were up, Q1 2022 by as much as £1.70/MWh. Power futures received support from rising carbon prices on the day as EU ETS unit prices gained €1.44 per tonne. Day ahead baseload gained almost £10.00 but the week ahead was down marginally as wind availability is forecast to improve next week. The strong rise in the day ahead price came as wind generation was forecast lower again today and as nuclear generation remains low.
The oil market rebounded on Monday
The oil market rebounded on Monday following a 7-session run of losses which saw Brent crude shed almost 10%, threatening to break below $65.00 a barrel. Yesterday’s rebound saw over half of the previous week’s losses recovered as Brent gained $3.57 to settle at $68.75 a barrel. With little change in the market fundamentals, a weakening dollar emerged as the main oil price driver on the day. Further upside will be challenged by the global pandemic, which is hampering demand recovery as many countries, including China, reimpose travel restrictions. EU ETS unit prices recovered marginally from Thursday’s heavy losses and were up by €1.44 per tonne yesterday.
Oil and carbon prices have continued yesterday’s rally
Whatever optimism that helped ease UK gas prices yesterday has evaporated and near futures contracts have all opened sharply higher this morning. The front month is up by 5.64p and Winter 21 has gained 5.25p overnight. Oil and carbon prices have continued yesterday’s rally in early trading today with Brent crude threatening the $70.00 mark. Prompt gas contracts are not yet showing any movement, but the UK gas system is forecast some 14MCM long for today, which may help ease pressure on the spot and day ahead contracts. Carbon prices have gained almost €1.00 overnight with EU ETS unit prices all trading above €56.00 per tonne this morning.