Carbon prices were supported by the vote in the European Parliament

19 April 2023

Gas Market

Tuesday was a relatively subdued day again on NBP price markets despite a slight uptick in the majority of contract prices. The front month opened just shy of a penny above Monday’s close before falling off in late morning to the low of the day at what was essentially parity to the previous close. In the afternoon prices increased marginally with near term prices adding just over 3 pence per therm, while further dated contract were less impacted, with an average increase of approximately 1.55 pence recorded across the next 3 seasons. Near term prices were buoyed by the expectation of colder temperatures next week, coupled with an unexpected outage at a Norwegian processing plant. Prices on the far curve were less impacted due to the return to production at a French LNG facility following strike action.

 Power Market

GB electricity baseload prices were influenced by the movements on the NBP gas market, with the largest price increases focussed on the front month, quarter and season. Despite the increase the 5-day average price move was still negative. Physical trading on other contracts was minimal with the closing prices based on indicative bids and offers. The strength on the Carbon market also fed into baseload electricity. Carbon prices were supported by the vote in the European Parliament which approved a number of reforms for the EU ETS. The uptick in gas prices also supported prices as the spot market increased by 2.9% to close at €93.10 per tonne, while the Dec-23 contract rose by 2.8%.

 Oil Market

Oil prices looked to be extending their decline for the second consecutive day on Tuesday but a late rally saw prices finish on a par with Monday’s close. Concerns surrounding the possibility of a hike in U.S. interest rates and the growth outlook continued to weigh on sentiment. The ongoing support for the U.S. dollar due to expectations of another interest rate hike in May by the Federal Reserve continued to dampen sentiment. The oil market was also pressured lower by the resumption of oil exports from the Turkish port of Ceyhan after a step taken by the Iraq federal government and Kurdistan Regional Government.  However oil prices had received a boost from China’s stronger than expected economic growth in the first quarter and record levels of oil refinery throughput in March.

Markets this morning

A drop in gas for power demand has helped the system switch to being marginally long, despite a drop in LNG send out of approximately 17%. Trading so far this morning is once again focussed on the near curve, with May, June and July all trading just below last night’s close. Q3-23 has also traded below last nights price assessment, with no other trades further out. Oil is also weaker with the latest trade $1.69 per barrel lower amid interest rate uncertainty in the US. The impact of the latest EU vote on the ETS scheme is still having an upward impact on carbon prices as Dec-23 continues from where it left off yesterday and strengthening further.  
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