Gas prices tumbled on the day
Following the Russian invasion of Ukraine, it was feared that gas flows into Europe may be curtailed but the reverse was evident on Friday with many major gas pipelines to the West recording an increase in flows. Gas prices tumbled on the day with most of the premium that was added on Thursday being unwound as the March contract, which expired on ICE on Friday, settled at 225.25p, down 96.42p on the day. Over the week the contract was 49.06p higher which was a little above the average for the near curve. Prompt prices also reversed much of the gains from Thursday as the day ahead product shed 74.95p. With the West responding to the conflict by imposing sanctions, the markets will watch for a response from Russia.
Baseload power futures moved into reverse on Friday
Baseload power futures moved into reverse on Friday in response to tumbling energy prices across Europe. The front month, March settled £30.75/MWh down at £214.75/MWh while the summer contract closed at £197.25/MWh, down £42.90/MWh. In the carbon markets, the spot closed 52 cents a tonne higher at €87.38 per tonne. Supply margins were tight on Friday giving support to prompt prices, but this was countered by forecasts for wind generation to remain above 10.2GW for Monday. Baseload for the day ahead eased by £13.85/MWh to settle at £221.33/MWh.
The global benchmark peaked at $101.99 a barrel on Friday
Brent crude settled $1.15 a barrel lower on Friday but ended the week $4.39 a barrel higher after a turbulent week in the markets. The global benchmark peaked at $101.99 a barrel on Friday before a raft of sanctions was imposed on Russia in response to the invasion of Ukraine. On the morning of the invasion, Brent peaked at $105.79 a barrel but the markets failed to hold those gains and the same scenario played out on Friday as the markets quickly gave up the premium added during early trading before going on to record a loss. While the sanctions imposed on Russia have not targeted crude oil flows, the U.S. President has been in talks with other leaders to agree a combined release of strategic crude reserves.
The energy markets have opened firmer this morning
With sanctions on Russia being stepped up over the weekend, the energy markets have opened firmer this morning. Natural gas futures on the NBP started over 50.00p up on Friday’s close but latest trades have seen gains fall back to around 35.00p with the new front month on ICE, April, last trading at 259.00p, while the summer has just gone through at 260.00p. Crude oil prices have rallied higher with Brent last exchanging at $102.89 a barrel, up almost five dollars a barrel on Friday’s close. In contrast, carbon EUAs have tumbled from the opening this morning with contracts out to 2024 down by an average of €6.06 per tonne.