EUA carbon and oil contracts open in negative territory

19 June 2023

Gas Market

UK gas prices began to unravel risk premium on Friday, following a volatile week due to extended outages in Norwegian gas fields. NBP contracts retraced Thursday’s short squeeze after traders weighed up short-term supply woes versus a high storage levels. Despite Friday’s downward momentum, it’s important to note that contracts across the curve are still in positive territory when considering a five-day moving average. Decreases were seen throughout the curve with the front month July contract settling at 87.20p, down 15.80p over the session and the bellwether Winter-23 contract settling at 131.48p, down 15.21p on the day. On the prompt, within day closed down 15.08p day on the day at 88.50p while the Day ahead closed down 21.63p since Thursday’s settlement at 82.00p. Prompt prices also pushed lower.  

Power Market

Contracts across the GB baseload power curve traded lower on Friday, tracking the UK gas market which began to unravel risk premium. The Q3-23 contract settled down the most, down £18.00/MWh while the Winter 24 contract lost £12.10/MWh to close at £135.00/MWh. The losses were less significant further out the curve, with the Summer-24 contract decreasing by £9.00/MWh to close at £113.50/MWh.  

Oil Market

Global oil markets maintained their upward momentum on Friday, with the Brent crude front month registering another session of gains. The market’s upward trajectory was fuelled by encouraging Chinese demand figures and the ongoing efforts of the OPEC+ to limit oil production. China’s oil demand is projected to surge to 840,000 barrels per day, representing an uptick from the previous estimate of 800,000 barrels. This expected increase in demand signifies the robustness of the Chinese economy and its impact on global oil markets. The Brent crude front month settled at $76.61 a barrel on Friday, up $0.94 on the day and an increase of $3.78 over a five-day average.  

Markets this morning

NBP gas contracts have picked up where they left off, as prices continue their downward trend this morning. The front month contract July last traded at 81.50 pence per therm while the Winter 23 contract is at 125.00 pence. In the prompt market, only the Within Day contract has traded, experiencing a decrease of 6.50p from Friday’s settlement. The UK gas system is balanced, with demand forecast at 124mcm. In the wider fuel mix, both EUA carbon and oil contracts have also opened in negative territory. The EUA Dec 23 last traded at €91.91 a tonne while the Brent crude front month contract is down $0.44 at 76.13 a barrel.  
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