Carbon prices are showing further strong gains

27 September 2021

Increase in Norwegian deliveries to the UK

An increase in Norwegian deliveries to the UK left the gas system well supplied, despite increased demand, and prompt gas prices eased significantly on Friday.  Losses of 10.5p on spot and day ahead contracts were recorded but the week ahead for this week was down by only half that amount.  Norwegian deliveries are expected to increase further this week as maintenance programmes conclude.  The decline in UK futures prices which followed last Monday’s surge came to an end on Friday with near futures contracts adding 1.50p to 2.50p.  The week-on-week increase was still substantial, but less than the 10% gain recorded for each of the preceding 4 weeks.

 GB power futures surged higher again

While UK gas price gains were more modest on Friday, GB power futures surged higher again as carbon prices jumped by 5% on the day.  The November contract hit a new high of £200.00/MWh while the full Winter 21 contract was up £7.25 to £186.25/MWh.  EU ETS unit prices gained over €3.00 to finish in a range between €63.71 and €64.71 per tonne. The day ahead baseload contract shed £22.00 to finish at £130.00/MWh on Friday as wind generation for today is forecast to hit 10GW.  That level of wind availability is not forecast to last however and the full week ahead contract was down by just £7.50/MWh.

 Crude oil prices gained for 4 days of last week

After dipping below $75.00 a barrel on Monday, crude oil prices gained for the remaining 4 days of last week and finished $2.67 a barrel higher week-on-week.  Brent crude gained 84 cents on Friday to settle at $78.09 while West Texas was up 68 cents to $73.98.  Crude oil reserves in the United States have fallen to their lowest level in over three years following the storm disruption in the Gulf of Mexico although output is continuing to ramp up.  The U.S. rig count is at its highest level since the start of the Covid pandemic.  Elsewhere, the markets are concerned for Chinese economic stability as the Evergrande property giant teeters on the brink of collapse.

The UK gas system is heavily over-supplied this morning

The UK gas system is heavily over-supplied this morning as supplies from Norway have increased to over 100MCM.  The system is forecast 28MCM long despite exports to Belgium and the Netherlands totalling 56MCM.  Prompt gas contracts have yet to trade but are most likely to ease with the improved supply-demand situation.  The same cannot be said for the futures market however as contracts for the winter months are showing similar gains to those seen on Monday last.  Crude oil also continues to strengthen with Brent crude up by 80 cents to edge closer to the $80.00 mark.  Carbon prices are showing further strong gains this morning with prices heading for €65 per tonne