Carbon EUAs settled higher on Friday

17 January 2022

Friday yielded another volatile session for the NBP

Friday yielded another volatile session for the NBP as early morning gains to the front of the curve were paired back later in the session.  The summer contract rose by over 20.00p per therm in the early part of trading but settled at 162.94p, just 6.01p higher on the day.  Low wind availability meant gas demand was increased to compensate in the power stack, while the Troll Field outage curbed imports from Norway by up to 26MCM per the Norwegian Gas Operator, Gassco.  They say outage is expected to be repaired by Wednesday now.  Over the week the front two months are down around 6.00p while the summer contract has fallen by 31.00p.

 Over the week the February contract was down

The GB baseload power market responded to gains in the NBP gas market and the carbon markets on Friday.  The front months settled at £215.25/MWh, up £15.25/MWh while the summer contract gained £10.50/MWh to close at £158.00/MWh.  However, over the week the February contract was down by £29.80/MWh. Forecasts for wind generation have improved for the week and baseload for the day ahead settled at £238.66/MWh, down £46.34/MWh.  Carbon EUAs settled 1.6% or €1.30 per tonne higher on Friday with the spot closing at €82.16 per tonne.

Brent crude settled higher on Friday

Brent crude settled $1.59 a barrel higher on Friday and closed at the highest level since the end of October last.  Over the week, the global benchmark has put up $4.31 a barrel as the markets see demand outstripping supply. Reports that China may tap its own strategic reserves failed to weigh on prices.  While the Omicron strain of the coronavirus may have tempered demand, it has not had the impact first feared when it emerged back in early December. On the other hand, OPEC+ have failed to hit production quotas despite commitments to increase production on a monthly basis while heightened tensions between Russia and the Ukraine have also boosted crude oil prices.  The dollar has had its worst week in four months and a weaker dollar tends to see crude oil prices rise.

The crude oil markets have reversed off earlier highs

Gas demand is forecast at 331MCM for today and supplies are tipped to be a touch long.  While imports from Norway are well down this morning due to the compressor issue at Troll, LNG send out is above 110MCM.  Trading on the prompt is slow to get off the mark today but near curve contracts are trading lower.  The February contract last exchanged at 201.00p, down 7.13p while the summer contract is almost 5.00p lower.  The crude oil markets have reversed off earlier highs and both benchmarks are around 30 cents a barrel below Friday’s close.  
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