Carbon EUAs weakened yesterday with the Spot closing €1.82 lower at €50.88 per tonne, a fresh 30-month low

23 February 2024

Gas Market

The decline in wholesale gas prices continued on Thursday with a further 1.82p being yielded by the front month of the NBP.  It’s the second anniversary of the Russian invasion of Ukraine at the weekend and natural gas prices at the front of the curve have fallen to the lowest levels for over two years as Europe has tempered its dependence on gas supplied by Russia. Gas storage levels for Europe are healthy at 65% with just over a month of the current winter to go. LNG deliveries have continued to arrive from America boosting gas reserves on the continent while demand remains low. A further three cargoes are due at UK ports by the middle of next week. Prompt prices switched tack during the day as early gains gave way leaving the Spot product a penny lower on the day.

Power Market

GB baseload futures tracked the NBP curve lower yesterday as gains from the previous session were reversed.  The March contract closed at £55.15/MWh shedding £0.70/MWh, while the Summer-2024 contract declined by a similar amount to settle at £55.05/MWh. Carbon EUAs resumed a downward trajectory yesterday as the Spot closed €1.82 lower at €50.88 per tonne, a fresh 30-month low as sentiment remains bearish. A fall in wind generation buoyed the power prompt yesterday while nuclear outages also added some support. Up to 2.4GW of capacity is offline due to planned and unplanned outages at four nuclear plants in the UK. Baseload for the Day ahead settled £1.52/MWh higher at £56.75/MWh.

Oil Market

Crude oil prices received support following reports of another missile attack on a vessel off the coast of Yemen yesterday.  Houthi Rebels have continued to rage attacks on shipping passing through the Red Sea corridor to the Suez Canal. Gains on the day were capped by the latest report from the Energy Information Administration which showed U.S. crude oil reserves climbed by 3.5m barrels to 442.9m barrels over the previous week.  It was lower than expected by the industry group American Petroleum but the effects of earlier refinery outages due to cold weather was still noted.  The outages have led to a draw on distillate stocks which were 4m barrels lower for the week and was over double the expectations. At the close, Brent for April delivery was 64 cents up at $83.67 a barrel.

Markets this morning

The weak sentiment has continued to weigh on NBP futures this morning with near months almost a penny lower in early trades.  March is just above the low of the day at 56.47p while the Summer-2024 contract has not got going yet but bid and ask spreads are pointing to a lower opening. Prompt prices are also enjoying a late start this morning with no deals agreed on screen up to 09:30am. GB gas demand has picked up today to cover for lower wind generation in the power stack and supplies are lagging by 8mcm according to the National Grid. Crude oil prices have reversed yesterday’s gains with Brent at $82.92, down 75 cents a barrel after reports that Israel is to join truce talks in Paris.