Carbon EUAs rebounded yesterday after seven sessions in decline

04 August 2023

Gas Market

Concerns over the outage at the Troll gas field continued to prop up the prompt and near NBP curve months on Thursday.  The fault was discovered during routine planned maintenance works and impacts just 12mcm/day but the fact that Gassco, the Norwegian gas operator, is still uncertain when the issue will be resolved is worrying to the market.  Norwegian gas flows via the Langeled line were reduced yesterday which left the GB gas system short.  Prompt prices reacted with the Spot closing at 74.00p per therm, adding 6.50p over the session, while the Day ahead product increased by 6.28p to close at 74.28p. It was a fairly uneventful day for NBP futures past the front months as these contracts settled reasonably flat with gains of less than a penny for the most part.  September, the front month for the NBP curve closed at 76.42p adding 4.26p for the second day running.

Power Market

GB baseload futures found support from gains on the near NBP curve and a rebound in carbon EUAs on Thursday.  The front month posted a gain of £3.50/MWh to close at £78.50/MWh while contracts from the winter out rose by an average of £1.10/MWh.  Carbon EUAs have been in decline over the previous seven sessions but recovered yesterday with contracts out to Dec-25 adding an average of 1.5% or €1.30 per tonne. Forecasts for higher-than-normal wind generation has kept a lid on the prompt for baseload power this week but gains on the NBP prompt countered that yesterday leaving the baseload Day ahead product to close £15.80/MWh higher.

Oil Market

On Thursday crude oil prices rebounded after Saudi Arabia and Russia committed to keep oil supplies tight next month.  OPEC+ are due to meet on Friday and in an interview ahead of this Saudi Arabia are said to extend the voluntary production cut of 1m barrels per day into September.  They are also open to extending the reduction in production or cutting supplies further if required.  The Russian Deputy PM, Mr. Novak said exports of oil would be cut by 300,000 bpd in September although this is less than the commitment of 500,000 bpd for August. Gains to crude oil prices were curbed by the Bank of England’s announcement of a further increase 0.25% in interest rates yesterday and at the close Brent was $1.94 up at $85.14 a barrel.

Markets this morning

The GB gas system has improved over yesterday’s performance as the National Grid is showing supplies with a modest surplus against todays demand of 139mcm.  Prompt prices on the NBP have retracted from yesterday’s close and the Spot and Day ahead products are down by around 2.00p per therm this morning.  NBP futures have opened softer too with the front month down by 3.62p to last trade at 72.80p.  The Winter contract has seen fewer trades but is 2.58p lower on the last exchange.  In the crude oil markets the October contract for Brent has continued to edge higher and is 34 cents up at $85.48 a barrel.  
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