GB power futures tracked gas prices at the NBP higher

 Recent UK gas market volatility returned as prices turned sharply higher

Following 2 days of relative calm, recent UK gas market volatility returned as prices turned sharply higher on Tuesday with nothing in the supply/demand situation on the day which would explain the surge in prompt prices.  The system did fall short in the afternoon as demand increased with a fall-off in wind generation but not to an extent which would cause such sharp increases.  The unseasonably cold weather is of course a factor but another underlying issue is the extremely low level of storage stocks, both in the UK and Western Europe generally.  Storage injection would normally be taking place at full pace in May and June but has yet to happen for any sustained period so far this year.

 EU and UK carbon prices gained 50 cent and 40p per tonne respectively

GB power futures tracked gas prices at the NBP higher on Tuesday with further support from gradually strengthening carbon prices.  Both front month and front winter contracts gained £2.80/MWh but movement further out the curve was marginal.  EU and UK carbon prices gained 50 cent and 40p per tonne respectively. The day ahead baseload price actually fell despite the higher gas price and forecast lower wind generation today.  Wind is expected to contribute less than 5GW today and to decline to under 2GW for the remainder of the week.  

Carbon prices continued to recover last week’s losses

Crude oil prices were virtually unchanged day-on-day as both Brent crude and West Texas Intermediate settled within 20 cents of Monday’s settlement prices.  Monday’s market was lackluster as the only news of any significance was that Iran had agreed a temporary extension of the monitoring of its nuclear facilities.  This would allow for talks between the U.S. and the Islamic Republic to resume this week.  Carbon prices continued to recover last week’s losses with EU ETS unit prices gaining an average of 50 cents per tonne.

Crude oil prices continue to edge a little higher

Demand on the UK gas system is forecast just above the seasonal norm for today but forecast deliveries are running 12MCM short.  Prompt prices are pushing higher again with the spot and day ahead contracts trading above 70.00p this morning.  The front month is up by a penny in lively trading across the board.  Norwegian deliveries have fallen to just 60MCM and while LNG send-out is running at the same level, the system is currently drawing 20MCM from storage to supplement supply.  Crude oil prices continue to edge a little higher and carbon prices likewise, with EUA’s up by a further €1.00 per tonne overnight.