EU emissions prices holding at record high levels

Demand on the UK gas system rose

As temperatures across the UK and Ireland fell below the seasonal norm on Monday, demand on the UK gas system rose to over 300MCM for the first time this winter.  The system was initially well-supplied but rising demand created a supply deficit of 4MCM by close of business.  The supply-demand balance reversal saw losses on the spot and day ahead contracts cut back to 3.00p but the week ahead retained earlier losses of 8.00p.  Fears for the impact of renewed lockdowns in many European countries, and consequent demand suppression, was feeding through to the UK NBP again on Monday with near contracts for the remaining winter months shedding an average of over 7.00p.

The GB power market recorded mixed movement

The GB power market recorded mixed movement on futures contracts yesterday as gas prices fell but carbon remained at record highs.  The front month shed £4.00/MWh but movement otherwise was limited.  The modest decline in UK gas prices yesterday was offset by EU emissions prices holding at record high levels and UKA’s soaring to over £65.00 per tonne. Prompt prices gained on forecast below normal temperatures and low wind availability for the rest of this week.  The day ahead contract for today gained £20.00/MWh as wind generation is forecast to halve from Monday’s level today.

 Crude oil prices continued to soften in early trading

Crude oil prices continued to soften in early trading on Monday but reversed as OPEC were reported to be considering reducing the proposed increase in production next month, prices rose towards the close.  Brent still finished below $80 a barrel having gained 81 cents to settle at $79.70 a barrel.  The earlier decrease in prices came as India and Japan responded to U.S. calls to dip into strategic reserves to help curb the steady rise in prices seen in recent months.  This initiative on the Asian markets was undermined by news later in the day of OPEC’s consideration of curtailing production increases in December.  Carbon prices eased marginally but still hovered close to €70.00 per tonne.

Yesterday’s decline in front month gas has been recovered

Yesterday’s decline in front month gas has been recovered with December trading at 218.00p, up 6.83p this morning.  Below normal temperatures continue to prevail across the UK and Ireland and wind availability remains subdued.  The net result is that gas demand is running some 30MCM above the seasonal norm at 310MCM but forecast deliveries for today are running 12MCM long.  The oil market presents a mirror image with yesterday’s gain completely erased as Brent trades 85 cents lower at $78.85 a barrel this morning.  Carbon prices have also eased marginally overnight with EU ETS unit prices trading below €70.00 per tonne again.