EUA markets are in decline with almost 5% falling out of the market in early trading this morning.

02 April 2024

Gas Market

Gas prices reestablished their recent downward trend following Wednesday’s hiatus. May-24, in its debut session as the front month, shed 1.51p/th and was assessed at 68.05p/th at the close having traded as low as 67.70p/th. Temperatures are expected to rise to above seasonal norms from the week commencing April 2nd, and the anticipated slump in demand is helping to suppress demand in the UK and Europe. The expected decrease in demand is contributing to the recent fall in European gas prices despite Asian LNG prices moving sideways across the week. Spot LNG prices in Asia continue to trade at six-week highs equivalent to approximately 75.25p/th, a seven pence premium to the NBP. The new front season Wnter-24 also traded lower on Thursday, but the movement was minimal in thin trading as the contract fell by 0.7p/th to 82.70p/th.  

Power Market

Weakness on the NBP gas market fed through to GB Baseload power contracts last Thursday. Expiring a day later than gas, the baseload contract for April lost £2.00/MWh closing at £59.25/MWh in its final session. Strong wind generation also fed into a declining baseload market. Gas fired generation fell by 66% to its lowest level of the year so far thanks to wind generation that was 20% above seasonal average levels. Carbon markets tracked European gas prices lower on Thursday. The absence of any auctions last Friday, due to the closure of markets, limited losses with a lower volume of credits in the market as the Dec-24 contract shed a mere 72 cents.  

Oil Market

Following two consecutive session of losses the Brent contract for May-24 delivery expired in a flurry of activity as prices increased in Thursday’s session, closing for the final time at $87.48/bbl. Prices had declined last Tuesday and Wednesday, driven by an expected build in stock in the US, however the actual increase in stock was less than had been anticipated. This, coupled with continued concern for supply with the OPEC+ meeting this week expected to confirm the continued supply cuts fed into the price increase on Thursday. Economic factors also played their part with the US economy showing strong signs of growth and increased oil demand.  

Markets this morning

Forecast for increasing temperatures across the rest of the week is feeding into demand figures on the UK system.  Demand for the day is currently set at 192 mcm, resulting in an expected oversupplied system. LNG sendout is forecast to decline across all terminals with a lack of cargos due to berth at UK ports this week. Crude oil is up $1.30 a barrel following a drone strike on a major Russian oil refinery this morning by Ukraine.  EUA markets are in decline with almost 5% falling out of the market in early trading this morning.