Carbon markets edged higher

23 January 2023

 NBP near curve contracts ticked up on Friday

After finishing fairly flat on Wednesday and Thursday, NBP near curve contracts ticked up on Friday with the February and March contracts adding an average of 16.58p.   The front season contract climbed by a similar amount to settle at 173.28p and was up almost 5.00p for the week, recording the first week-on-week gain since early December.  The near curve reacted to gains on the prompt as the spot and day ahead contracts settled 13.05p and 14.05p higher respectively.  The GB gas system was tight for much of the last week with a cold spell pushing up heating demand while a drop off in wind generation also increased demand during the week.  Temperatures are to return to above the norm from midweek and this should lighten the pressure on the GB gas system for the back half of the week.

 Baseload futures reacted to gains in NBP futures

Wind generation is forecast to fall below the average of the last week and prompt prices where buoyed on Friday.  Baseload for the day ahead added £23.64/MWh to settle at £139.29/MWh.  Latest forecasts show wind to average between 5 -6.0GW on Monday, down from an average of 10.0GW for the previous week.  On the curve, baseload futures reacted to gains in NBP futures as the February contract settled £7.75/MWh up at £164.50/MWh. Futures contracts out to winter averaged gains of £11.25/MWh on Friday.  Carbon markets edged higher for a fourth day with the spot closing at €82.13, up €0.91 per tonne.

  Brent crude finished higher week-on-week

Brent crude also finished higher week-on-week as the March contract added $1.47 a barrel on Friday to bring the increase for the week to $2.35 a barrel.  The lifting of Covid-19 restrictions in China has boosted hopes of a rebound in demand as both the IEA and OPEC revised their forecasts for 2023 higher during the week.  Crude oil prices were also buoyed by hope that the U.S. Fed and EU Central Bank would reduce the scale of increases to interest rates although both bodies have warned that tackling inflation was their priority.  At the close of play on Friday, the March contract for Brent was at $87.63 a barrel, while the West Texas Intermediate contract settled 98 cents up at $81.31 a barrel.

 The GB gas market has opened softer

The GB gas market has opened softer to start the week with near futures down by around 7.50p.  The front month, February, last traded at 161.23p and summer has gone through at 165.75p.  On the prompt there has been some downside too with the day ahead product down 5.05p from Friday’s close.  The GB gas system has opened short with supplies at 344MCM forecasted 18MCM behind today’s demand.  In the crude oil markets, Brent was trading down earlier but has rebounded and currently exchanging around 40 cents a barrel above Friday’s close.  
Find out more about our Commercial Energy Services