EUA and UKA carbon costs increased

03 February 2022

UK gas market was once again well supplied during Wednesday

The UK gas market was once again well supplied during Wednesday although demand did tick up by 10MCM from the previous day.  Send out from Norwegian sources remains high although it is likely that some of this supply is transiting through the UK as exports to the continent were in excess of 30MCM.  it was not surprising that following the previous day’s see of the NBP opened with a bounce od 5.00p.  This additional premium grew to 10.00p as the market tried to recover the previous day’s substantial losses.  The market failed to push on and finished well off it’s high.  The front month contract added 3.11p to close at 183.90p while the front Summer was up by 5.57p at 180.30p.

GB Baseload futures retraced some of the losses

GB Baseload futures retraced some of the losses from the previous two sessions on a combination of firmer NBP gas prices and surging EUA carbon costs.  The rise in gas prices was not surprising given the heavy losses in the previous two sessions.  However, EUA and UKA carbon costs increased by €4.45/tonne and £3.20/tonne respectively. The minimum supply margin remained comfortable on the day and the outlook continues to improve as wind generation forecasts stay robust.  The day ahead baseload contract weakened further as it settled at £165.00/MWh.

 WTI contract settled up

The crude oil market remined relatively stable once again during Wednesday’s session with contracts trading in a range of just over $2.00.  The Brent crude contract for April delivery peaked at $90.52 in the early part of the session but gave up these gains later on as the contract moved to a low of $88.28.  The market seems to be searching for a more definite direction with conflicting signals giving participants some food for thought.  The recent run up caused by concerns over the situation in Ukraine seems to have paused and the decline in the value of the dollar has also led to a re-evaluation.  Brent closed at $89.47, up by 31 cents while the WTI contract settled up by 6 cents at $88.26.

Gas prices opened firmer once again this morning

Gas prices opened firmer once again this morning with opening offers coming in at 4.00p above last night’s close.  There were few takers at this price level and the market has now re-evaluated the position and is trending lower.  The front month has slipped into negative territory as it trades at 183.50p, down by just 0.40p from last night’s close.  Last trades for seasonal contracts are firmer than the previous settlement but bid/offer spreads on these periods would suggest a downward revision.  The UK gas system is well supplied this morning with a surplus of 12MCM as near-term weather forecasts suggest a continuation of milder weather.
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