Carbon EUAs continued to shed premium yesterday

16 December 2022

Wednesday’s losses were partially recovered yesterday

Wednesday’s losses to near NBP curve contracts were partially recovered yesterday as contracts responded to gains on the prompt and a short gas system.  The British gas operator has faced the first test of the winter this week and had to reduce exports to the continent on Thursday to balance the system as demand was expected to rise to 36% above the seasonal norm.  The day ahead product ended the session with a modest increase of 6.00p and remains roughly on a par with the Dutch TTF equivalent, while gains for the front month of the NBP, January, was almost double that at 12.24p. Contracts from the summer out climbed by an average of around 5.35p yesterday having declined by around 9.30p over the previous session.

 Baseload for the day ahead eased

Baseload for the day ahead eased by 7.9% or £28.02/MWh on Thursday in response to increases in forecasts for wind generation.  Baseload futures settled mixed yesterday with January easing by £3.75/MWh to £335.00/MWh while the February added £1.45/MWh.  Baseload contracts from the summer out were generally higher at the close but gains were marginal. Carbon EUAs continued to shed premium yesterday and chalked up a third successive day of losses.  The spot product declined by €1.34 per tonne to €84.99, while the Dec-23 contract settled at €88.69 per tonne, down €1.22.

 The rally in crude oil prices was cooled on Thursday

The rally in crude oil prices lasted three days and was cooled on Thursday as demand woes came back to the fore following a rise in the dollar and interest rate hikes across the globe.  The Bank of England and the EU central bank followed the U.S. Fed in raising interest rates again this week and more increases are promised in the new year.  The hawkish monetary policy renewed fears for economic growth in the U.S. and Europe.  While in China, factory output for November slowed to the poorest results in six-months as Covid-19 cases surged.  News that the Keystone oil pipeline was to resume partial flows after being shut down following a leak in Kansas last week also weighed.  At the close Brent for February delivery had declined $1.49 to $81.21 a barrel.  

 Crude oil prices are in decline

Trading has been brisk on the near curve contracts of the NBP this morning with all winter months over 20.00p down on last night’s close.  The January contract last traded at 310.00p, which is showing a fall of 27.13p today.  The summer contract has also seen some action and is exchanging at the morning low of 305.00p.  Prompt prices are slower to get off the mark but based on spreads should open lower.  The GB gas system is in better shape today with supply and demand in equilibrium.  The supply side is boosted by LNG sent out of over 130MCM while imports from Norway are nominated just shy of 100MCM.  Crude oil prices are also in decline with Brent down $1.83 to $79.38 a barrel.
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