Carbon prices surged higher yesterday as the Spot for EUAs closed at a two-month high

Gas Market

The energy markets across Europe were on edge yesterday following the terrorists attack in Moscow and reports that Russia targeted an underground gas storage facility in Ukraine at the weekend.  Initial reports from Ukraine are saying the storage facility is intact after the weekend bombardment but a full engineer’s assessment is required.  Near natural gas futures on the TTF were buoyed by almost 4.0% yesterday while closer to home the front months on the NBP eased late in the session and added around 2.6% day-on-day.  The front month, quarter and season will all expire on ICE this week which added an extra layer of volatility yesterday as short positions were filled.  At the close, April was up 1.67p, Quarter 2-2024 added 1.80p which was equaled by the full summer contract.  Cooler temperatures added to gas demand yesterday and lifted prompt prices by between 1.50p and 2.20p.  

Power Market

The weekend attacks on Ukraine’s energy infrastructure provided support to energy markets across Europe yesterday. GB baseload futures were 2.9% higher at the close as the front month, April added £2.20/MWh to settle at £65.25/MWh. Carbon prices rose sharply on the day with gains over 5.0% to EUAs and UKAs. The Spot for EUAs closed at €63.02 per tonne, its highest settlement for two months. Baseload for the day ahead declined modestly on Monday as supply margins remain healthy.  Wind generation is forecast to fall on Tuesday and may not get above 5.0GW which is well below the average for the last week of 11.5GW.  

Oil Market

Crude oil prices were buoyed by the weekend attacks on energy assets in Russia and Ukraine which eclipsed the United Nations call for a ceasefire in Gaza yesterday. Government officials in Russia are believed to have ordered oil producers to cut output to meet its pledge to OPEC+ and scale down production and exports by 471,000 barrels per day during Q2-2024.  Brent has gained almost $11.00 a barrel since the start of the year when the price was $75.89 a barrel. The May contract closed at $86.75 a barrel yesterday which is $4.43 above the 50-day average price. Tighter supplies and continued geopolitical risk could push the global benchmark closer to the $90 a barrel marker.  

Markets this morning

NBP futures and prompt prices have opened softer this morning as yesterday’s gains have been reversed for the most part.  The front month, April is almost 2.00p down at 71.45p while the Summer-2024 last traded at 70.40p, down 1.54p.  The Spot and Day ahead are 2.05p and 1.50p lower respectively reflecting the balanced gas system which is forecast 14mcm long against today’s demand of 207mcm. Carbon EUAs are mixed this morning and crude oil prices are flat with Brent last exchanging at $86.70 a barrel.