Carbon EUAs continued to move lower yesterday and the Dec-24 contract settled below the €80.00 per tonne price mark.

07 November 2023

Gas Market

NBP gas futures opened softer on Monday with contracts for the winter months falling by around 4.50p early on.  The market steadied for the rest of the morning and then losses were extended in the afternoon with December hitting a low of 113.18p before settling just above that at 113.66p, down 8.89p on the day. Contracts for the rest of the winter months declined by a similar amount leaving the near curve just a couple of pence above the price levels seen in the week before the Hamas attacks on Israel. A significant amount of risk premium added because of fears that the conflict could spread and disrupt LNG supplies from the Middle East was eroded last week and continued to unwind yesterday.  Market sentiment appears to have switched with gas demand expected to ease because of an increase in wind generation for the next week or two.  Prompt prices recorded modest losses for the most part, but the Balance-of-month declined by 5.55p on the day.

Power Market

With the near NBP curve falling by over 7.0% yesterday, it was no surprise to see GB baseload futures ease over the session.  The front month, December, shed £5.90/MWh to close at £94.25/MWh while the Summer-24 contract declined by £4.83/MWh to settle at £95.18/MWh.  Carbon EUAs continued to fall on Monday with the Dec-24 contract setting below €80.00 per tonne for the first time in over a year. While wind generation is forecast above the seasonal norm for the week, there were some reports that a reactor with 660MW capacity will be taken offline this week for maintenance until the end of the month.  Baseload for the day ahead settled higher at £90.50/MWh.

Oil Market

Crude oil prices rebounded on Monday following the reports at the weekend that confirmed Saudi Arabia and Russia agreed to stretch their voluntary oil cuts until the end of the year.  Saudi started easing crude oil production by 1m barrels per day in July and have extended their pledge each month since. Russia have also extended their commitment to cut exports of crude and oil products by 300,000 barrels per day.  The latest extension was expected by the market and probably explains the relatively muted response to prices on the day as Brent settled just 29 cents a barrel higher having traded around a dollar a barrel higher for much of the session. The market also has one eye on China for any hint of a recovery as the world’s second largest oil consumer is due to release some key economic results this week.

Markets this morning

The GB gas markets have opened a touch firmer this morning as the near curve recovers some of Monday’s losses.  Activity is focused on the front months with December 4.60p higher suggesting traders are taking advantage of yesterday’s losses.  The Summer contract is up by a similar amount but has only exchanged hands the once.  On the prompt, the Day ahead product is 6.75p higher at 106.00p while other contracts have yet to open.  Brent is $1.74 a barrel down this morning with the last trade going through at $83.44 a barrel.
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