Contracts at the front of the curve suffering the biggest losses
The UK gas market extended losses for the third session in a row with contracts at the front of the curve suffering the biggest losses. Summer delivering contracts took the main brunt of the downward pressure as prices from June to September declined by just under 11.00p per therm. The June contract fell to 135.03p, down by 12.93p and remains at a discount of between 20.00p and 60.00p to other Summer months. The falls on the curve came despite some increases on the prompt market where an opening deficit on the UK gas system provided direction. It was not long before the gas system achieved balance and prices eased as a result.
The GB baseload power curve extended losses
Wind generation in the UK is forecast to come in about 20% above the seasonal norm as forecasts indicate 7GW in coming days. The minimum supply margin expanded as a result but as yet there has been no significant impact on prompt power prices. EUA and UKA carbon contracts took a further step lower yesterday with prices for 2022 falling by €2.30/tonne and £2.27/tonne, respectively. The GB baseload power curve extended losses for multiple sessions in a row with just over £4.00 on average coming out of contracts. Winter 2022 baseload is priced at £226.500/MWh down by £4.00 from the previous close.
The crude oil market did not stray too far from its previous settlement
The crude oil market did not stray too far from its previous settlement as the market failed to find any new direction that said, Brent crude peaked at a high of $114.40 but weakened towards the close as the contract fell to $111.86 a barrel. Brent has already traded to a high of $115.69 this month which is above the high point in April. The zero Covid policy in China is still dampening demand and fears are mounting again of more lockdowns in Beijing and Shanghai. The next big test for the market could be the onset of the US driving seasons although with gasoline at $4.00 a gallon it remains to be seen how this will play out. At market settlement Brent crude closed at $113.42 a barrel up by 87 cents from the previous close.
EUA carbon market is seeking to recover recent losses
Gas demand this morning in coming in at 231MCM and supplies are more or less matching this number. As has been the case for many weeks now interconnector exports remain the single biggest source of demand with 93MCM being exported to continental Europe. With plenty of wind generation on the system demand from conventional gas generation has dropped to 71MCM. The gas market has opened a touch firmer this morning with early trades at the front of the curve being priced higher than last night’s close. The EUA carbon market is seeking to recover recent losses with prices up by €1.40/tonne.