GB baseload power contracts posted significant gains

25 November 2021

The gas market opened relatively flat

Following the strong gains during the previous session the gas market opened relatively flat with contract moving between modest gains and losses over the course of the morning session.  The supply/demand balance on the day was quite positive with the UK gas system operating with a 14MCM surplus.  This system comfort was in the context where temperatures were expected to remain low for the coming days and distribution demand was expected to grow.  A strong carbon price on the day saw prices increase by €3.74 and this appeared to give the gas market some impetus to go higher.  In the afternoon session NBP gas contract added further premium with the front month up by 6.32p at 235.37p/therm.

 Shortage of supply put significant pressure on National Grid

GB baseload power contracts posted significant gains on Wednesday as an outage at the Langage CCGT plant took 905MW offline and put additional pressure on the system.  This shortage of supply put significant pressure on National Grid to purchase expensive balancing power which ranged between £3,000 and £4,000/MWh. The January 2022 contract surged higher by £22.00 as it closed at £273.55/MWh. Strong gains in power contracts dragged both the gas and carbon markets higher as generators were happy to pay the higher input costs and supply into the balancing market.

Brent crude contract was more or less flat as it closed

The steady ascent of global crude oil prices was arrested somewhat during Wednesday’s market as prices did not move to far from the previous settlement.  The market appears to have ignored the efforts of a number of large oil consuming nations that announced that they would release a proportion of their strategic oil reserves in an effort to push prices lower.  The amount of extra barrels that have been committed by countries such as the U.S., India and China falls well short of market expectations and the impact on prices has been minimal so far.  At market close the Brent crude contract was more or less flat as it closed up by 6 cents at $82.25 a barrel.

Gas prices have opened weaker this morning

Gas prices has opened weaker this morning with the front month and January contracts displaying losses of just over 3.00p per therm.  The February 2022 contract is trading at 235.53/therm, down by 5.43p which is just slightly lower than the premium added during yesterday’s session.  The EUA carbon market has gone into reverse and contracts have moved off their high point with 21 cents coming out of prices.  The GB power system is in better shape this morning as wind generation ramps up.  There is a wind weather warning in place, so greater wind generation availability is expected to have a dampening impact on power prices.