Carbon prices are recovering after 3 days of losses at the end of last week

 Gas-fired generation demand pushed overall demand sharply higher

UK gas futures see-sawed last week and finished with just marginal movement in either direction on Friday, leaving near futures contracts lower by an average of 1.25p week-on-week. As wind generation fell to just 4GW on Friday, gas-fired generation demand pushed overall demand sharply higher and the UK gas system supply-demand balance tightened on the day. A modest supply surplus in the morning was eroded as the day progressed and prompt gas prices gained as a consequence. The futures market saw mixed, if marginal, movement with the new front month contract for April recording the biggest gain of just 0.15p.  

GB baseload power futures fell lower on Friday

GB baseload power futures fell lower on Friday, mainly thanks to another drop in carbon prices on the day. EU ETS unit prices fell by almost €1.00 per tonne to settle below €38.00 per tonne. The front month power contract, which expired on Friday, was unchanged day-on-day while losses on contracts for Q2 and beyond shed an average of £0.33/MWh. The day ahead baseload power contract jumped by £12.00 per MWh as wind generation was forecast to fall below 3GW today. With demand on the GB grid running well below the seasonal norm, variations in wind availability are having more impact than would otherwise be the case.

Oil market recorded losses on Friday but remained higher week-on-week

The oil market recorded losses on Friday but remained higher week-on-week. The U.S. benchmark, West Texas Intermediate, shed almost $2.00 on the day to settle at $61.50 a barrel. Concerns that higher prices would encourage a boost in U.S. production curbed the run up in prices while there are also concerns that OPEC, who are due to meet on Thursday, will relax their production cuts from April. Losses on the global benchmark were more modest with Brent falling by 75 cents to settle at $66.13 on the day but still $3.22 a barrel higher week-on-week. Carbon prices fell lower again as EU ETS unit prices shed almost €1.00 per tonne to settle below €38.00 per tonne.  

Demand on the UK gas system has risen above the seasonal norm

As temperatures dipped sharply overnight, demand on the UK gas system has risen above the seasonal norm this morning. Wind generation has dropped to just 1GW and gas-fired generation demand has pushed overall demand to just over 300MCM. The system is currently forecast 14MCM short and within day and day ahead gas prices have gained 1.60p and 1.35p. The new front month is up by a penny and the full Summer 21 contract by 0.54p. On the oil market, the new front month contract for May has gained just over a dollar to currently trade at $65.65. Carbon prices are recovering after 3 days of losses at the end of last week.