EUA carbon contracts closed higher on Friday’s session

03 July 2023

Gas Market

The NBP market closed higher on Friday’s session with the near cure and prompt buoyed by a significant drop off in LNG arrivals to Britain and extensions to planned Norwegian gas maintenance.  Centrica announced they have increased storage capacity in the Rough site to 54 billion cubic feet (bcf) from 30 bcf after only partially reopening earlier in the year, after closing in 2017. This may put pressure on UK gas supplies in the short term as they look to fill up this extra storage place, at least until the maintenance works at Nyhamna and Ormen Lange are completed, however for the longer term this should be good news for supplies. The near month Aug-23 closed at 91.22p, up 3.88 pence per therm on the day. On the prompt, within day and day-ahead finished up 4.80 and 6.50 pence per therm respectively on the day.

Power Market

GB baseload power prices climbed across Friday’s session pressured by rising gas and carbon prices. The front season, winter-23 gained £4.75/MWh session on session as gas prices increased, continuing to be buoyed by the high levels of maintenance on Norwegian gas fields. The biggest increase was seen in the August-23 contract which will be the front month now, up £6.25/MWh session, settling at £94.50/MWh. Prompt prices softened on Friday with higher wind generation forecasts, at least 20% above seasonal norms. Baseload for the day ahead declined by £21.79/MWh to £65.11/MWh.  EUA carbon contracts closed higher on Friday’s session with the Dec-23 contract closing at €89.60 a tonne, up €1.51 on the day.

Oil Market

Crude oil prices extended gains in Friday’s session but posted their fourth straight quarterly loss as investors worried that sluggish global economic activity could lower fuel demand. Prices were bolstered by a U.S. Commerce Department report showing annual inflation rising last month at its slowest pace in two years. Signs of moderating inflation could slow the Fed down in increasing interest rates again, which would increase economic growth and oil demand. Prices also drew support from the announcement by Saudi Arabia that they plan to cut output by a further 1 million barrels per day in July in addition to a broader OPEC+ deal to limit supply into 2024. Brent crude’s front month August-23 which expired on Friday, settled up $0.56, at$74.90 a barrel while WTI settled up 78 cents at $70.64 a barrel.  

Markets this morning

NBP futures opened higher this morning, but the market has reversed is now trading down on the session. The front month August-23 contract had traded as high as 97.84 pence per therm but is now trading down 1.21p at 90.01p. The winter-23 contract has also lost the premium priced earlier in the session, now trading down 1.5p at 133 pence per therm. On the prompt, within day is currently trading up 4.95 pence per therm at 95p while the day ahead contract is yet to trade. Crude oil prices have continued to strengthen this morning with Brent up $1.42 at $75.19 a barrel after briefly opening lower and trading as low as $74.74.
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