The January gas contract settled at a new record high

 Prompt gas prices increased

Reports that the Nord Stream 2 pipeline could be operational within days saw European gas prices dip early yesterday.  The reality that only commissioning gas might flow and that commercial deliveries might not flow until the end of the year saw UK gas prices surge again with prices for the winter months gaining an average of 4.00p by close of business on Monday. The January contract settled at a new record high of 140.00p.  Norwegian supply remains restricted, as does LNG send-out, but the system remained in surplus throughout the trading day.  Prompt gas prices increased none-the-less, with the spot and day ahead contracts gaining 2.85p and 3.75p while the week ahead was up by 1.90p.

GB baseload futures moved higher on Monday

GB baseload futures moved higher on Monday as gas and carbon prices both gained on the day.  Concerns over supply margins through the winter months drove the full Winter 21 contract up by £2.75 to settle at £129/MWh yesterday.  EU ETS unit prices gained a further 60 cent to finish the week in a range between €62.29 and €63.37 per tonne. The day ahead baseload power contract fell back from Friday’s record high but remains elevated at £180/MWh as GB supply margins remain tight.  Wind generation struggled to reach 2GW on Monday and is expected to remain well below the seasonal norm for the week.

 The oil market remains rangebound

The oil market remains rangebound with the global benchmark, Brent crude, hovering around the $72.50 mark.  Brent crude shed 39 cents to settle at $72.22 while West Texas Intermediate slipped below $69.00 a barrel.  The global benchmark fell after Saudi Aramco cut its Official Selling Price (OSP) to Asian markets by $1.30 a barrel for October.  The price cut comes as production is increasing and appears to be a move to maintain market share in Asia where Saudi sells 75% of its crude oil.  The U.S. benchmark is still being influenced by the damage to oil infrastructure by Hurricane Ida and the question of whether production facilities will return to service before refining facilities.

 Carbon emissions contracts for 2022 and 2023 have eased slightly overnight

A slight increase in Norwegian deliveries has improved the supply-demand balance on the UK gas system which is forecast 17.5MCM long today.  Prompt gas contracts have yet to trade but near futures prices are down by over a penny.  GB power supply margins are again tight with wind generation barely providing 1GW this morning.  Crude oil prices have recovered most of yesterday’s slippage to remain tight around the $72.50 mark.  Carbon emissions contracts for 2022 and 2023 have eased slightly overnight but are still trading at over €62.00 per tonne.