EU ETS unit prices rebounded strongly

LNG shipments ramping up over the next 3 weeks

The recent see-saw pattern of movement in UK gas prices continued on Wednesday with near futures contracts recovering most of Tuesday’s losses.  The front month gained 7.90p to settle at 233.81p.  Prices were still down on a week ago when contracts for the current winter months exceeded 250.00p.  Day ahead gas gained 10.00p on forecast higher demand with lower temperatures today.  Increased wind availability, reducing gas-fired power demand, will offset some of the temperatures sensitive demand.  Milder weather is due to return next week and is forecast to last into early November.  The supply outlook is also improving with LNG shipments ramping up over the next 3 weeks.

GB baseload power prices recovered some of the losses

GB baseload power prices recovered some of the losses of earlier in the week as gas and carbon prices rebounded on Wednesday.  The front month November contract gained £9.50 while remaining contracts for the current winter gained an average of £8.00/MWh.  EU ETS unit prices rebounded strongly following 3 days of losses to settle in a range between €57.66 and €58.62 per tonne. The day ahead baseload contract gained despite forecast higher wind generation today.  Wind is expected to provide over 10GW today, compared to just under that level on Wednesday but demand is also expected to rise with lower temperatures for the rest of this week.

Oil prices have been supported by gas and coal prices at historic highs

Crude oil traded in a range of $2.20 a barrel with Brent hitting an intra-day low of $83.60 before rallying to close on a high of $85.82 a barrel. The intra-day reversal followed the release of weekly inventory data from the U.S. EIA which showed a heavy draw on stocks last week.  Oil prices have been supported by gas and coal prices at historic highs, and with both projected to remain elevated throughout the current winter, crude oil may well remain at or near current levels even if OPEC decide to further ease production quotas.  EU ETS unit prices rebounded strongly following 3 days of losses to settle in a range between €57.66 and €58.62 per tonne.

 Renewable power generation is outstripping gas-fired generation on the GB grid

Heating demand on the UK gas system is running at its highest since early April.  Strong wind generation has cut gas-fired power demand however and overall demand is up by just 10MCM on yesterday and the system remains comfortably supplied.  Renewable power generation is outstripping gas-fired generation on the GB grid by around 20% as wind has ramped up to 11GW this morning.  The front month has relinquished yesterday’s gain while the Summer 22 contract is up by a penny.  On the oil market, Brent has also retraced yesterday’s gain and is currently trading at $85.00 a barrel.