For the fifth session in a row the power market added significant premium

 Gas market opened firmer at the outset

Following Tuesday strong gains on the gas market, Wednesday’s market proved to be no different with strong gains once again being the order of the day.  Markets opened firmer at the outset and contracts extended gains throughout the session.  The August contract assumed front month status and promptly added a further 3.42p to close at 85.87p per therm.  Other contracts also added similar amount with the Winter 2021 contract breaking through 90.00p mark to close at 91.99p per therm.   The gains in the UK NBP market have become relentless with the bulls firmly in control.  July closed for the final time on Spectron at 86.75p per therm.

 There was some narrowing on spark spreads

GB baseload power futures contracts continued to track gas, coal and carbon markets higher as for the fifth session in a row the power market added significant premium. on the plus side there was some narrowing on spark spreads as the minimum supply margin improved but this did little to outweigh the movement in commodities. The first day ahead price for July baseload gained £2.91 to finish at £88.94/MWh.  Renewable generation declined as anticipated and average only 1.6GW on the day.  This low level of renewable generation is expected to sustain until at least Sunday.

Crude oil market traded in a relatively benign fashion for the last two sessions

Compared to other products in the global energy complex, the crude oil market traded in a relatively benign fashion for the last two sessions.  During Wednesday’s market Brent crude moved between gains and losses over the course of the session as the market traded in a range of €1.20.  The product reached a high point of $75.60 and low of $74.39 in a market that was unsure of which direction it should take.  The latest U.S. inventory figures from the Energy Information Administration failed to make much difference and crude closed at $74.82 a barrel, almost flat to the previous session.  

 UK gas market remains extremely bullish

The UK gas market remains extremely bullish once again this morning and price increases are proving to be relentless.  The market has gapped up on opening with the new front August contract trading at 90.04p per therm, up by 4.21p on last night’s close.  Contracts out to Winter 2021 have posted gains of between 3.00p and 4.00p per therm.  The EUA carbon market has reached a new high with the spot contract trading at €58.25 per tonne.  This upward movement in the carbon market is driving gas prices higher along with the general tightness in European gas markets.  Crude oil markets are trading higher this morning with Brent at $75.47