UK gas prices opened firmer on Tuesday morning
UK gas prices opened firmer on Tuesday morning as the market extended gains from the previous session. Some of this price movement was linked to the ramping up of European Union sanctions against Belarus and the possible response in terms of gas supplies via that country. Prices took off in earnest in the afternoon session and considerable premium was added when it emerged that the German regulator had suspended the approval process of the Nord Stream 2 pipeline which was expected to deliver significant flows of gas to Western Europe by the end of the year. As ever the front month and quarter were most impacted with 35.00p added to both these contracts. The full calendar 2022 contract closed at 137.85p, up by 8.60p.
EUA carbon contracts rose to their highest point
GB baseload power contracts posted significant gains during yesterday’s session on a combination of gains in the UK NBP gas market and record EUA carbon costs. Energy markets across Europe reacted negatively to the news that the German regulator had suspended the process of certification for the Nord Stream 2 pipeline. This delay means the chance of Europe receiving supplies the new pipeline is greatly diminished. EUA carbon contracts rose to their highest point as the spot closed at €67.69 per tonne, adding 89 cents in the process. The day ahead baseload price was stable on the day as the forecast increase in renewable power materialized.
Crude contracts added premium
The two-session decline in crude oil prices was arrested on Tuesday as crude contracts added premium and recovered most of the recent losses. Contracts traded between losses and gains over the course of the session as the market reached a low of $81.52 and then set a high point of $83.14 in the afternoon session. Brent crude finished not far of its high point as the market settled at $82.43 per barrel. The market clearly is turning its focus to the release of the latest API stockpile data and then the later Energy Information Administration report on U.S. inventories. There is some concern that resurgence in Covid 19 cases will lead to further lockdowns with a potential negative impact on demand but for the time being the market remains bullish on demand.
Gas market is offering precious little relief from rising prices
This morning’s gas market is offering precious little relief from rising prices as the market continues its upward trajectory. Gas contracts at the front of the curve have added just over 7.00p with other contracts that have traded so far are up by a similar amount. The market remains on edge as it digests the news from yesterday that the certification process for the Nord Stream 2 pipeline has been paused by the German regulator. The issue centres around the legal basis for the company that operates the pipeline and its non-compliance with German law. The prospect for increased Russian supplies remains in the balance and gas markets across Europe continue to add significant risk premium.