Carbon EUAs eased by up to 4.0% yesterday

22 June 2023

Gas Market

Trading on the NBP futures market continued with some volatility on Wednesday morning as Norwegian gas supply concerns lingered.  Near futures had racked up modest gains in the morning but these were reversed in the afternoon. News that two LNG shipments due at UK ports by the end of the month was welcomed by the market.  At the close the July contract was 4.64p lower at 91.82p while the winter contract settled at 136.76p easing by 2.30p from the previous close.  Prompt prices eased for the most part with higher-than-expected wind generation displacing some gas fired plants for the power stack.  The spot price closed 3.20p lower while the day ahead product was just a half a penny down on the day.  

Power Market

The GB baseload curve eased through the afternoon session yesterday as lower carbon and gas prices weighed.  The front month declined by £2.50/MWh to close at £101.25/MWh while the winter contract settled at £137.75/MWh, down £0.75/MWh.  Carbon EUAs eased by up to 4.0% yesterday with the spot closing at €88.90, down €3.70 per tonne.  UKAs shed £1.44 per tonne with the Dec-23 contract closing at £58.16 per tonne. Baseload for the day ahead stayed flat yesterday with low wind forecast for the remainder of the week.  Natural gas continues to dominate the power stack today, making up around 45% of supplies while solar and nuclear are next at around 15% each while wind is just 5%.  

Oil Market

Crude oil prices rebounded on Wednesday with a weaker dollar providing support following comments from the U.S. Fed chair, Jerome Powell.  Mr Powell suggested that the central bank is closing in on its policy targets although there is some work left to do and the market took this as an indication that interest rates would be left unchanged for the short term.  A weaker dollar makes crude oil less expensive for foreign currencies and so encourages buying activity which boosts the price.  Concerns of crop shortfalls which could lower biofuels blending and lead to an increase in crude oil demand also added to the increase in crude oil prices on the day and at the close, Brent was $1.22 higher at $77.12 a barrel.  

Markets this morning

NBP futures continued to soften on opening this morning, but latest trades have reversed some of the early gains to the near curve. The front month traded down to a low of 89.45p but the last trade for July has gone through at 91.46p, marginally down on last nights close.  Further out the winter contract has yet to trade but the summer-24 product is down just 0.65p to 128.00p.  Prompt prices have eased shrugging off a short gas system this morning with demand pitched at 140mcm.  Crude oil is down 51 cents a barrel to last trade at $76.61 a barrel.  
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