Carbon EUAs settled higher

10 January 2023

 Near curve contracts reversed the losses from Friday

Signs that the gas supply demand balance in the UK is tightening provided support to the NBP prompt and near curve on Monday.  The day ahead settled 12.55p up with news that domestic demand was up over 20.0% on Monday.  Near curve contracts reversed the losses from Friday and the lead month, February, settled 13.64p up at 183.64p. Contracts for the front summer and winter rose by around 8.50p and settled at 192.27p and 214.34p respectively. Exports to the continent through the Bacton Zeebrugge line will be curtailed from today due to maintenance however, gas storage supplies for Europe are at between 80-90% of capacity compared to around 50% at this time last year.

 GB Baseload settled higher

With the NBP curve reversing Friday’s losses, and carbon prices rising sharply the GB baseload futures market followed in tow yesterday.  The February contract was marked £7.50/MWh higher and settled at £187.00/MWh.  The summer and winter contracts for 2023 saw similar gains and contracts past this were mixed.  Carbon EUAs settled an average of 4.6% higher with the spot settling at €78.43 per tonne. Wind generation is forecast to get near 19.0GW on Tuesday but gains on the NBP prompt curbed losses to the day ahead product.  The contract settled marginally lower at £128.70/MWh.

The crude oil markets were buoyed

The crude oil markets were buoyed by the news that China reopened it’s boarders over the weekend, the first time in three years.  Optimism for increased oil demand was high as the country is believed to have raised its crude oil import quotas for 2023 by 20%.  With the Lunar festival around 10 days away, its estimated that there will be around 2 billion domestic trips made during the holiday.  In the U.S., the inflation rate is expected to fall gain for December, down to below 7.0% from the high of 9.1% in June-22 and this may influence the Federal Reserve to scale back on the level of interest rate hikes when they meet up next month.  At the end of trading, Brent for March delivery settled at $79.65, up $1.08 a barrel.

The NBP opened with uncertainty

Once again gas futures on the NBP opened with uncertainty as early gains have been pared back with February down from the morning high of 190.00p to last trade at 181.10p.  The summer contract has traded just the once this morning which was at 191.00p, down 1.27p from last night’s close.  The prompt market looks like it will open softer too but as yet there are no deals on the board for today.  Demand is down to 260MCM for today and exports to the continent through the Bacton Zeebrugge interconnector are reduced due to scheduled maintenance works. Brent is flat with latest trades going through 3 cents up on last night’s settlement price of $79.65 a barrel.
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