Carbon EUAs out to 2026 fell by an average of 3.3% on Friday

Gas Market

With the issues at Nyhamna and Troll being rectified, market fundamentals continued to weigh on natural gas prices on Friday as near NBP futures racked up a third day of declines.  The Summer contract was down 5.68p for the week however, the front Winter contract was over 8.45p lower over the week. With European storage reserves above 67% there is a possibility that levels could be as high as 50% by the end of the current winter and this would not only pressure prices for the summer months but also next winter. Low water levels at the Panama Canal continue to steer U.S. LNG vessels towards Europe even with one of the liquefaction trains at the Freemont LNG facility offline until the end of February. Langeled nominations were back above 70mcm for Friday after the outages had curtailed flows earlier in the week and prompt prices also retreated on the day with the Day ahead closing at 67.68, down 1.08p.

Power Market

Weaker gas and carbon prices weighed on GB baseload futures on Friday.  The front month settled £0.95/MWh lower at £62.80/MWh while the Summer 2024 contract closed at £61.28/MWh, down £1.23/MWh.  Carbon prices continued to move significantly lower on the day with the Spot EUA contract closing at €56.91 per tonne, a new two-year low.  EUA contracts out to 2026 shed 3.3% or €2.09 per tonne on average. Forecasts for wind generation to pick up for the week ahead weighed on the prompt on Friday.  The revised forecasts see generation from wind rise above seasonal norms and should dent demand from gas fired units over the week.

Oil Market

Crude oil prices ended the week in positive territory after Israel continued to bombard Gaza raising concerns that the conflict will spread in the area.  Hopes of a ceasefire in the Middle East have receded after Israel stepped up airstrikes on Rafah, a boarder city between Gaza and Egypt at the end of last week, days after the Israeli Prime Minister rejected proposals for a ceasefire.  It was the fifth day of gains in a row for Brent, and the longest streak of gains since the end of August last year. U.S. refinery activity stepped up last week after freezing weather caused outages at the end of January in certain areas.  Production in the world’s largest oil consumer hit a new record during the week at 13.3m barrels per day.  Brent for April delivery settled 56 cents up at $82.19 a barrel.