Gas markets across UK and European region surged higher

There was a significant amount of volatility within day

Gas markets in the UK and across the wider European region surged higher once again on Tuesday with significant premium added to most contract periods.  The market was up by over 10.00p on opening and extended these gains throughout the session.  In the early part of the session prices did turn negative for a brief period but upward movement was quickly re-established. There was a significant amount of volatility within day with the front month October being a case in point.  The front month fell to a low of 153.01p and thereafter climbed to its high point of 167.07p.  At settlement this contract finished at 164.95p per therm, up by 11.69p. Average gains out to Winter 2021 came in at 11.36p per therm.

GB baseload power market surged higher once again

The GB baseload power market surged higher once again following the lead of the UK NBP gas market. Strong gains on the gas market fed directly into the baseload power market with significant pressure on contracts out to Winter 2021.  The front month October baseload contract added £13.05 and closed at a record high of £159.50/MWh. EUA carbon contracts declined on the day with the Spot shedding €1.69 to close at €59.75 per tonne.  This easing was not enough to impact power prices with low wind availability and system tightness keeping day ahead baseload power prices elevated.

Third session in a row the crude oil markets posted premium

For the third session in a row the crude oil markets posted premium although for the last two sessions the amounts added have been modest.  Brent crude traded in a very narrow range of less than a dollar with the market reaching a high of $74.28 and a low of $73.78.  The market continues to be driven by the imminent of the latest storm that is due to hit the Gulf of Mexico.  Storm Nicholas continues to track towards the region although it would appear that the impact will be less severe that initially anticipated.  The re-evaluation of the storm saw prices steady towards the close.   At market close the Brent crude contract was more or less flat as Brent crude settled at $73.60 a barrel.

Gas prices at the NBP have opened with sharp increases

Gas prices at the NBP have opened with sharp increases once again this morning as the front month on the curve trades to 192.01p, up by 27.30p. Contracts out to Winter 2021 has added similar amounts in a hugely volatile market. To put these extraordinary gains into context the gas market has increased today by more than the settlement price for gas in 2020.  There are a number of issues in the market such as LNG availability, Winter gas capacity from Gazprom, low wind generation and storage levels.  None of these give either individually or collectively justify the gains that we see this morning or in the past number of weeks.