Carbon prices rose to their highest level in August on Wednesday

17 August 2023

Gas Market

UK gas prices fluctuated on Wednesday as traders gauged the impact of full inventories against potential supply disruptions at Australian liquefied natural gas (LNG) facilities and Norwegian maintenance. Latest data from Gas Infrastructure Europe shows gas storage levels have effectively reached the 90% target mandated by the European Union for Nov 1st. Woodside Energy, operator of Australia’s largest LNG facility, reported positive progress in wage talks but a union alliance said key differences remained. After briefly opening higher, NBP futures swiftly reversed and unwound some of the premium added in the previous session. The front month September contract had traded as high as 107.34 pence per therm but eventually settled at 95.28p, down 3.15p on the day. On the prompt, the Within day and Day-ahead contracts settled down 3.00p and 3.70p respectively.

Power Market

GB baseload contracts had a mixed day on Wednesday with the front of the curve tracking the losses in the NBP market while further out the curve settled relatively flat as both the EUA and UKA carbon markets settled higher. The front month September contract settled at £90.50/MWh, down £2.75/MWh day on day while Winter-24 was the only season that settled higher at £131.95/MWh, up £0.20/MWh over the session. Carbon prices rose to their highest level in August on Wednesday, after the Commitment of Traders data showed further rise in Investment Funds’ net short positions. The Dec-23 contract settled at €88.58 a tonne, up €1.90 on the day.

 Oil Market

Crude oil prices settled lower on Wednesday as traders weighed worries about China’s sluggish economy against expectations of tighter supply in USA. There is concern about China’s economic growth after retail sales, industrial output and investment figures failed to match expectations. July activity figures indicate that China may struggle to meet its growth target of about 5% for the year without more fiscal stimulus and calls for authorities to take decisive steps.  U.S crude inventories fell by 5.96 million barrels the week to Aug 11 despite crude production rising to its highest since the pandemic decimated fuel consumption. Oil also fell along with equities after the release of the Federal reserve’s minutes showed central bank officials were divided over the need for more interest rate hikes at their last meeting. Brent front month October settled at $83.45 a barrel, down $1.44 over the session.

 Markets this morning

There has been limited movement in the NBP market this morning with just the three front month contracts trading so far. The front month September contract is currently trading up 2.14 pence per therm over the session at 97.42p. On the prompt, we haven’t seen a transaction in the spot so far while the Day-ahead contract is up 1.20p on the day despite the UK gas system opening marginally long. The Dec-23 EUA contract has extended its gains and is currently trading €0.33 a tonne higher while Brent crude Oct-23 contract has seen a small bounce this morning, currently trading up $0.20 a barrel in early trading.  
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