Carbon EUAs have continued to climb

08 December 2021

NBP opened with significant gains on Tuesday

Forecasts for cooler temperatures coupled with an under supplied gas system saw prompt and near curve contracts on the NBP open with significant gains on Tuesday. The front month and day ahead contracts were up by 10.00p within the first hour and increases were extended through the session with the summer and winter contracts for 2022 closing over 16.00p higher.  January, the front month on the NBP curve, settled at 243.98p, up 13.90p on the day and the spot and day ahead closed with similar gains.  The GB gas system struggled to remain on par with the demand of 324MCM yesterday, the first real test of the winter, despite a healthy LNG send out of 75MCM and 112MCM of imports from Norway.

Baseload power futures recorded gains

Baseload power futures recorded gains of between 5% and 10% on the back of higher gas and surging carbon EUAs yesterday. The January contract settled £12.25/MWh higher at 315.00/MWh. Carbon EUAs rose by a further €3.60 per tonne yesterday with contracts setting new record highs as the spot closed at €85.24 per tonne. Baseload power for the day ahead edged higher despite forecasts for increased wind generation on Wednesday. The contract added £2.00/MWh to close at £206.00/MWh which remains near the lower end of prices for this month. Wind generation is expected to top 12.0GW today.

  Crude oil prices continued to rebound

Crude oil prices continued to rebound on Tuesday with Brent adding $2.36 a barrel as the market believes the new Omicron strain will not impact demand as hard as first thoughts.  Following the announcement of the new covid-19 variant crude oil prices tumbled by over $12.00 a barrel. The early evidence from health officials in South Africa is that the new strain is not as severe as previous variants, and the market now seems less concerned of the impact on demand recovery. Crude oil prices were also buoyed by a rally in the U.S. share market yesterday as West Texas Intermediate closed at $72.05 up $2.56 a barrel.  

The gas markets have opened firmer

The gas markets have opened firmer again this morning with sharp gains to the prompt and near curve contracts on the NBP.  The spot and day ahead products are trading around 260.00p while the front month last exchanged at 266.50p.  The GB gas system has opened with a slight deficit again today, but demand is down at 313MCM. Further along the NBP curve, the summer 22 contract has also recorded sharp gains and is currently 10.00p higher.  Carbon EUAs have continued to climb into new territory with contracts a further €3.00 a tonne up.  In the crude oil markets, Brent is 36 cents a barrel higher at $75.80 with today’s focus turning to the U.S. and the weekly inventory report due out later.