The gas winter months keep setting new record highs

01 September 2021

 Both the prompt and near futures settling with strong gains

After a rest day for the UK bank holiday natural gas prices at the NBP continued the bull run on Tuesday with both the prompt and near futures settling with strong gains for the fifth session in a row.  The remaining winter months keep setting new record highs as the markets across northern Europe have concerns of tight supplies over the coming months should the winter turn severe.  Gazprom, the giant Russian supplier has indicated that Nord Stream 2 is close to final commissioning and could supply up to 5.6BMC this year, however, total exports from Russia would not be significantly different.  It would seem that the additional capacity NS2 might bring will just be replacing existing capacity.

 Carbon EUAs eased marginally yesterday

The bullish gas market drove power prices on the baseload curve higher on Tuesday as September expired at a record high.  The winter contract settled £4.60/MWh higher yesterday while gains for contracts past this were closer to £1.25/MWh.  Carbon EUAs eased marginally yesterday but had increased by around 70 cent per tonne on Monday. Baseload for the day ahead declined sharply on Tuesday but still remains elevated at £122.00/MWh.  Forecasts for lower wind generation were not enough to support the prompt yesterday and wind generation is expected to below the seasonal norm for the week.

 Crude oil prices eased on Tuesday

Crude oil prices eased on Tuesday with demand along the Gulf coast impacted by hurricane Ida at the weekend.  Initial reports show up to 94% of offshore oil production was knocked out and this equates to around 1.7 million barrels per day.  It’s expected that most refining activity in the area will recover quickly but any delays could lead to a large dent in U.S. crude oil reserves and would support prices.  OPEC+ had agreed to increase output by 400,000 barrel per day from August to December and while the group are coming under pressure from the U.S. to increase production further, they are unlikely to deviate from their plans.

All markets have opened firmer this morning

All markets have opened firmer this morning with gains on the board for gas, GB power, Carbon, and crude oil.  The winter months on the NBP have added over 3.00p in early exchanges while the spot has surged by over 8.00p.  Other products on the prompt screen are idle as bid and offer spreads are wide.  Near futures for the GB baseload curve have opened between £2.00 and £2.50/MWh higher too while carbon EUAs have added 40 cent per tonne.  In the crude oil markets, the new front month for Brent, November, is 28 cents a barrel up at $71.91 while West Texas, also 28 cents higher at $68.78 a barrel.