There were sharp losses in the carbon markets with EUAs shedding an average of 5.6% yesterday

03 January 2024

Gas Market

The ample gas supplies currently available continued to drive market sentiment on Tuesday as natural gas futures and prompt prices settled lower. It was a slow start for futures following the break for the new year’s holiday as the market weighed up the escalation of attacks on shipping in the Red Sea at the weekend.  By the middle of the session the near curve started to weaken which continued to the close of play leaving the February contract 4.44p down at 76.27p.  The Summer-2024 contract fell by a similar amount to close at 76.38p.  Prompt prices softened by up to 8.70p yesterday as early losses were sustained to the end of trading despite an uplift in gas demand to counter for lower wind generation in the power stack.

Power Market

With both NBP futures and carbon yielding significant premium on Tuesday it was no surprise to see prices on the GB baseload curve fall.  The February and Summer-2024 contracts fell by around £6.30/MWh to settle at £80.75/MWh and £72.75/MWh respectively.  Carbon EUAs shed an average of 5.6% yesterday as the Dec-24 contract settled €4.48 down at €76.17 per tonne. Despite a fall in wind generation baseload for the day ahead eased by almost £16.00/MWh yesterday. However, news of an unplanned outage at EDF’s Heysham nuclear reactor provided some support to prompt prices. The 585MW capacity reactor is expected to be offline for around two-weeks.

 Oil Market

Crude oil prices opened firmer on Tuesday following the attacks on shipping in the Red Sea by Houthi militants over the weekend, but prices eased after some volatility. Concerns of disruption to shipping through the Suez Canal, the quickest and most cost-efficient route to Europe for LNG and oil tankers from the East, provided the early support to crude oil prices. Brent rallied by around two dollars a barrel, but tensions eased as the market got going and a strong dollar combined with demand woes in China weighed on prices later in the session.  Manufacturing in the worlds’ second largest oil consumer declined for a third month in December while the Consumer Purchasing Index fell below 50, indicating a contraction in China’s industry. Brent for March delivery settled $1.15 lower at $75.89 a barrel.

Markets this morning

The news of the killing of the deputy Hamas leader in Beirut yesterday has raised concerns that the Israel Hamas war will spread in the region.  NBP futures prices have ticked up this morning with the front month, February, last trading 2.23p above last nights close.  The Summer-2024 contract at 79.09p is showing an increase of 2.67p.  On the prompt, the day ahead product has added 5.75p in early exchanges while very little else is active so far.  Carbon EUAs have recovered around €1.00 per tonne and crude oil prices are fairly rangebound with the last trade for Brent going through at $75.74 a barrel.