UK prompt gas market fallen to a level not seen since summer 2020

The gas market opened weaker once again Monday

The gas market opened weaker once again Monday as war related premium continued to ease. The downward momentum was particularly evident in the June and July contracts lost 8.79p and 16.43p per therm, respectively. A selloff was also evident in Winter-22 which lost 14.21p, closing at 228.31p per therm. Prompt gas prices traded below the 50.00 per them mark for the second session in a row with the spot at 43.30p and day and lower still at 40.05p.  Deliveries of LNG into the UK remain at high levels and continue to be exported to Europe.  In addition, storage levels across the continent are increasing which in turn is pressuring Winter 2022 contract.

The UK baseload power market extended losses

The UK baseload power market extended losses for the second session in a row in line with a declining energy complex. EUA carbon contracts retraced recent gains on Monday, with the Dec-22 contract shedding €5.07/tonne to close at €86.71/tonne. Other contracts shed similar amounts with prices now ranging between €86.28 and €93.46. The prompt power market came under similar pressure as the NBP market with day ahead power declining by a massive £65.00 to close at £93.85/MWh.

Brent crude market shed previous gains

After moving higher for the last number of sessions, the Brent crude market shed previous gains during Monday’s session, settling at $105.94 a barrel down $6.45 from the previous settlement. The market moved downwards on the back of a strong US dollar which hit €1.051, a high not seen since late 2016. As crude oil is priced in dollars, a stronger dollar makes crude more expensive for holders of other currencies. Increasing interest rates in key global economies alongside demand concerns continue to pressure the market. China, the world’s second biggest consumer of oil has seen demand fall by 7% since the beginning of 2022.

The EUA carbon market remains under pressure

The UK prompt gas market has fallen to a level not seen since summer 2020 as contracts trade in the teens. The spot is priced at 15.00p per therm with day ahead available at 32.00p as once again ample supplies of gas weigh on the system. Demand in the UK has fallen to 203MCM this morning and the system is quite comfortable with line pack expected to grow by 14MCM by the end of the day. Distribution heating demand has fallen further while exports to continental Europe remain high at 89MCM. The EUA carbon market remains under pressure and 40 cents below yesterday’s close. Brent crude is priced at $104.64 a barrel.  

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