EU emissions prices continue to move higher

UK gas prices did ease a little on the day

Restricted Norwegian deliveries and low LNG send-out saw the UK gas system relying on storage withdrawals to maintain balance on Friday. In what would normally be storage injection season, the coincidence of late summer maintenance programmes and a dearth of LNG shipments to the UK has created a supply shortage. There was further restriction of Norwegian supply, with the Langeled line delivering just 30MCM on Friday, and LNG send-out also slipped but the system remained in surplus throughout the trading day thanks to storage withdrawals. UK gas prices did ease a little on the day for the first-time last week but near futures contracts were still up by over 10% week-on-week for a third consecutive week.

 GB baseload futures recorded losses on most contracts on Friday

GB baseload futures recorded losses on most contracts on Friday despite emissions prices hitting new record highs on the day. Gas prices eased on the day despite restricted Norwegian deliveries and low LNG send-out but EU ETS unit prices gained a further 40 cent to finish the week in a range between €61.69 and €62.77 per tonne. The day ahead baseload power contract surged to a new record high of £240/MWh as supply margins are forecast to be extremely tight on Monday. Wind generation is forecast at just 2GW on Monday and is expected to remain well below the seasonal norm for the week.  

 Oil market finished the week on a slightly bearish note

The oil market finished the week on a slightly bearish note leaving prices little changed overall week-on-week. Brent crude shed 42 cents to settle at $72.61 while West Texas dropped 70 cents to $69.29 a barrel. The decision by OPEC to continue with planned production increases month-on-month to year end outweighed any bullish sentiment arising from lower crude production in the Gulf of Mexico in the aftermath of Hurricane Ida. A weaker-than-expected jobs report from the U.S. last week also undermined the recent rally in oil prices. The dollar continued to back-off recent highs against other major currencies but not to any extent to cause oil prices to rise.  

UK gas market has begun the new week’s trading with substantial gains

Once again the UK gas market has begun the new week’s trading with substantial gains in near futures prices. The current restriction of Norwegian deliveries and paltry LNG send-out continues to leave traders nervous for winter supply with storage gas still well below last year’s levels. While wind generation has dropped below 0.5GW this morning, the UK gas system remains in surplus as overall demand is below seasonal norms. As a result, prompt gas prices may not come under too much pressure today. Crude oil prices have opened 70 cents down on Friday’s close but EU emissions prices continue to move higher with prices for next year pushing towards €63/tonne