Russian invasion of Ukraine continues to elevate energy prices

The front month set a record high on Friday

The front month set a record high on Friday, closing at 460.27p as the Russian invasion of Ukraine continues to elevate energy prices.  The April contract for the NBP settled 76.22p higher on the day and exceeded the previous high for the front month by almost 8.00p which was set on 21-Dec-2021.  It was another day of volatile trading on Friday and the winter-22 contract settled 29.10p lower at 310.00p which was at odds with movement for the rest of the curve.  Forecasts for cooler temperatures coupled with an outage at the Norwegian Karsto plant on Friday added to the upside in prompt prices.  The International Energy Agency issued a report detailing a plan for Europe to become less reliant on Russian gas supplies and involves drawing more gas from wider sources while accelerating energy efficiency improvements.

Fears of the war escalating has driven investors out of the market

The continued assault by Russia on Ukraine has spooked energy market across Europe and GB baseload prices spiked again on Friday.  The front month, April, settled £85.20/MWh up at £371.00/MWh. Baseload for the day ahead settled lower as forecasts for wind generation are higher than Friday’s level of around 3.5GW and should rise to 10.0GW later in the week. Carbon EUAs settled an average of €1.27 per tonne lower on Friday but over the week the spot has declined by over 20.3% as fears of the war escalating has driven investors out of the market.

Declines recorded on Thursday in the crude oil markets were quickly forgotten on Friday

The declines recorded on Thursday in the crude oil markets were quickly forgotten on Friday as the markets marched on with fears the war between Russia and Ukraine could tighten supplies further.  More companies in West are trying to distance themselves from Russia and this is leading to disruption in Russian exports including crude oil.  Russia provides 10% of the global oil demand and more shippers are reluctant to move this crude oil. The escalation in the war overshadowed the news that Iran and the International Atomic Energy Agency reached an agreement and paves the way for the deal to be concluded shortly, which could see an increase in Iranian production soon.

The gas markets opened with a bang

Brent had traded up to $139.13 a barrel overnight in Asian markets after the U.S. talked of an embargo on Russian oil.  Prices have come back since with the latest trade for the global benchmark at $125.70 a barrel, which is up $7.59 a barrel on Friday’s close.  The gas markets opened with a bang and the April contract quickly rose to 800.00p per therm, however, the contract last traded at 590.00p, which is 210.00p down from the morning high.  There have been no trades for prompt products completed yet as there are wide bid and ask prices on the board.  

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