Carbon EUAs are moving higher in early trading

14 April 2023

Gas Market

There was more indecision in the GB gas markets early on Thursday with NBP futures flipping between gains and losses before settling with marginal losses across the board. Near month contracts have fallen close to the lows reached around three weeks ago, but seasonal contracts from the winter out are still around 20.00p above the lows reached then.  Reinjection of gas for storage since early March has almost doubled UK storage reserves, but concerns for European supplies continue to prop up contracts from the winter out. The front month contract, May, settled below the psychological barrier of 100.00p at 99.88p, easing by 0.92p while the winter contract fell by 1.90p to 147.69p.  Prompt prices were flat or eased marginally and the GB gas system was in balance.  

Power Market

Near months on the GB baseload curve eased for a second session in a row yesterday.  Declines of around £2.50/MWh were recorded out to summer 2024 over the day as falls in gas and carbon prices weighed.  The front month settled at £103.15/MWh, declining by £2.20/MWh while the winter contract settled at £158.00/MWh, after shedding £2.50/MWh. Forecasts for lower wind generation supported the day ahead product for baseload on Thursday.  The contract settled £16.27/MWh higher at £115.84/MWh.  Wind generation is forecast to fall to around 3.4GW, or 33.0% of the average for the last week.  

 Oil Market

With crude oil prices recovering over the last week, there was an element of profit taking in the market yesterday and the selloff prompted a decline in the markets.  Crude oil prices had reached the highest level in over a month on Wednesday with prices boosted by the recent announcement from OPEC+ to cut production and hopes that the U.S. could ease off increases in interest rates as their rate of inflation had slowed in March.  In a monthly report published by OPEC, they highlighted rising inventories as a reason for their surprise cuts in supplies and it is expected supplies will tighten later in the summer.  At the close, Brent for June delivery had shed $1.24 a barrel to close at $86.09 a barrel.  

Markets this morning

Trading has been muted on the NBP futures market this morning with recent trades seeing prices marginally down.  The May contract has rebounded from the morning low of 97.81p to last trade at 99.26p, down 0.62p from Thursday’s close. Further out, seasonal contracts have exchanged only a handful of times and the winter is 1.69p down at 146.00p.  Carbon EUAs are moving higher in early trading with the Dec-23 contract 23 cent a tonne higher.  Brent for June delivery is just 6 cents up at $86.15 a barrel having traded in a tight range all morning.  
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