EUA carbon contracts record their largest daily loss since June

28 November 2023

Gas Market

On Monday, UK gas prices opened lower and maintained a downward trajectory throughout the session. The front of the curve bore the brunt of the risk premium erosion, with the December-23 contract shedding 7.58p to close at 112.21 pence per therm, its largest daily loss since late October. Gas for delivery in Summer-24 hit an intraday low of 110.42p before settling at 111.15p. The 2024 NBP gas future contracts have fully realigned with their pre-Middle East conflict levels, highlighting how the gas market has resiliently shrugged off its initial concerns.  With UK LNG regasification levels at 72mcm yesterday, it offset a weather driven increase in demand. As a result, the Spot contract lost over 5% to close at 112.80 pence per therm.

Power Market

GB baseload power futures shed risk premium during yesterday’s session, taking direction from the gas market. The Summer-24 contract reached a twelve-session low, closing at £97.35/MWh, while the December-23 front month contract dropped by £5.00/MWh to close at £97.75/MWh. The prompt market experienced milder losses, with baseload for day ahead delivery closing £2.76/MWh lower at £112.60/MWh. EUA carbon contracts record their largest single day decline since June as prices tumble during yesterday’s session. Opening at €76.36 a tonne, the EUA Dec-23 contract dropped sharply to close at €73.08 a tonne. The downward momentum was supported by weakness in the wider energy fuel mix.

Oil Market

Yesterday, the global oil markets experienced a slight downturn, as the market remains on edge regarding the upcoming rescheduled OPEC meeting this Thursday. The Brent crude front month contract opened at $80.40 per barrel but dipped to an intraday low of $79.13. The prevailing sentiment in the market continues to be weak, primarily due to the uncertainty within the OPEC regarding production allowances. There is speculation that some African nations including Angola and Nigeria were aiming for higher allowances, while Saudi Arabia want to reduce 2024 production levels further in an attempt to bolster prices. The January contract for Brent settled at $79.98 a barrel, down $0.60 on the day.

Markets this morning

This morning’s UK gas market has resumed its downward trend, with contracts continuing to decline. The front month contract December-23 and Summer-24 are both last trading at 107.00p, while Q1-24 is down 5.31p at 111.00 pence per therm. Limited trading activity has been recorded in the prompt market, however an oversupplied system is likely to support a downturn in prices. In the wider energy markets, EUA carbon contracts are mirroring a similar trajectory this morning, with the Dec-23 contract last trading at €72.33 a tonne, down €0.62 from yesterday settlement. Find out more about our Commercial Energy Services.