Global crude oil markets took a hammering on Friday

Trajectory of the UK gas market was very much in line with recent session

The trajectory of the UK gas market was very much in line with recent session as prices moved between gains and losses over the course of the session on Friday.  Prices did not move too far either way as participants struggled to determine a clear direction.  Prices were in negative territory of between 10.00p and 15.00p just before the afternoon index window and turned positive thereafter.  The front month November contract was the only period to finish in negative territory and this was very much a function of the weaker prompt market.  Both the spot and day ahead contract shed 44.00p and settled at 207.30p and 206.05p respectively.

EUAs shed further value

Save for the front month and some seasonal contracts the GB baseload power market added more premium during the market on Friday.  Price increases for the Winter 2022 baseload power contract were once again in excess of any gas gains as spark spreads for this period continued to firm. The spark spread for Winter 2022 has risen to £232.79/MWh. Prompt baseload power contracts remain under some pressure with the weekend coming in at £219.80/MWh while day ahead shed £63.00 to close at £186.42/MWh. EUAs shed further value with the spot now priced at €65.41 per tonne.

 Impact of interest rises across many major economies took their toll on oil market

Following just one session of respite global crude oil markets took a hammering on Friday as the impact of interest rises across many major economies took their toll.  The US Federal reserve announced a 75-basis point increase earlier in the week and most other major economies followed suit albeit with fifty basis points being the norm.  Demand side worried once again emerged with many market participants now becoming less optimistic that a global recession can be avoided.  The potential for significant demand destruction remains a distinct possibility and this undoubtedly prompted the sell off.  The Brent crude contract for November delivery settled at $85.03 a barrel, down by $4.91.

The EUA carbon market is more stable this morning

The UK gas market has opened weaker this morning with a sell off evident from the start.  The front month October contract is under significant pressure with prices down by 51.58p as the contract changes hands at 235.00p per therm. The Winter 2022 contract is also taking a hit with prices for this period down by 36.69p at 450.00p per therm. The UK gas system is running 8.2MCM short on a forecast demand of 247MCM. There is 68MCM of LNG on the system at the moment and this is ramping up.  The EUA carbon market is more stable this morning following the big losses from Friday. Brent crude is priced at $84.75 a barrel, down by 28 cents.

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