On Monday both gas and electricity gave up well in excess of the gains made on Friday; this was expected but nonetheless welcome.
There will undoubtedly be more volatility due to the Middle East situation, but we expect the downward pressure on prices to continue for the foreseeable future given the upcoming Chinese New Year, healthy stocks, and strong US gas production.
|Gas: Expectations of increased wind output and an over supplied grid weighed on prompt prices yesterday. Gas storage levels of 2.1bcm were 138mcm above the same time last year adding further pressure to the prompt. Currently this morning, near term contracts are trading down on last nights close.
Power: Prompt and curve power contracts softened yesterday, in line with decreases seen in NBP contracts. Week 4’s wind generation is expected to increase by ~20%, likely generating 16.5GW/day adding pressure to prompt contracts. For price outlook, as of last nights close, please see the bottom table.
Oil: Crude prices weakened yesterday as further concerns around Chinese demand and profit taking. A stronger US dollar added further pressure, making oil more expensive for non-USD currency holders.
Carbon (EU ETS): The ICE Dec-24 gained yesterday, closing at €67.25/t. Opening at €67.20/t this morning, the contract is now trading at €65.68/t.
Carbon (UKAs): The ICE Dec-24 fell to £35.85/t yesterday. The contract is currently trading at £35.01/t.
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