Carbon prices eased yesterday

06 December 2022

The volatility in the UK gas markets continued

The volatility in the UK gas markets continued on Monday with near curve contracts opening firmer before closing marginally down on the day.  The front month January peaked at 357.00p, which was over 20.00p up on Fridays close as the market reacted to gains on the prompt.  Temperatures are expected to fall a few degrees below the seasonal norm but this more like 5-6°C down on the recent mild weather. While wind generation picked up yesterday that too is expected to fall heading into the weekend which will add to gas demand in the UK.  In the afternoon a decline in gas futures on the TTF prompted a sell off on the NBP and January and contracts out to next winter settled below Fridays close.  The spot and day ahead closed higher ignoring the healthy gas system with robust flows from Norway and LNG.  

 Prompt prices remained relatively flat

A fall in power prices across Europe along with declining clean spark spreads weighed on the GB baseload curve on Monday.  Near curve contracts shed between £14.75/MWh to £24.95/MWh while futures from the summer out eased by an average of £3.40/MWh.  Carbon prices also eased yesterday but losses were more modest as the spot for EUAs closed at €87.26 per tonne. Wind generation is forecast to drop over the coming days and is expected to fall to around 8.0GW today, down from almost 11.0GW for Monday.  Prompt prices remained relatively flat however, with the day ahead contract for baseload closing at £288.07/MWh.  

Prices for crude oil were buoyed on Monday morning

Prices for crude oil were buoyed on Monday morning following the news that OPEC+ would adhere to their plan to cut output by 2m barrels per day.  The market also rose on the back of the start of the EU ban on Russian seaborne crude oil and fears that this could limit supplies.  The G7 price cap of $60 per barrel is thought to be set too high to prevent Russia from making a profit, however, Moscow have threatened to cut supplies in response.  Later in the day crude oil prices switched tack after reports showed U.S. services activity picked up in November with employment rebounding also and this drove fears that the U.S. Fed will continue to aggressively increase interest rates.  Brent for January settled $2.89 a barrel down at $82.68 a barrel.  

GB gas demand has picked up this morning

GB gas demand has picked up this morning and is forecast at 351MCM, but supplies are comfortable with a surplus of 7MCM predicted by the National Grid.  Trading on the prompt has been sluggish with just the spot active and is 2.05p down on last night’s close.  The near curve for the NBP opened stronger this morning but latest trades have seen the front month fall back.  January peaked at 345.00p and is currently exchanging at 336.00p which is 0.62p above last night’s close.  The crude oil markets have also moved into reverse gear with latest trades for both Brent and WTI down 80 cents on yesterday’s close.  
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