Prices continued to remain neutral on Thursday with some decreases and some increases but nothing like the activity of earlier in the week.
The fundamentals remain strong with Europe & the UK pretty much at 100% of winter 23/24 gas requirements already in storage and more LNG cargoes on the way. Talk of a cold snap in Q1 is not helpful but overall our forecast that prices will continue to reduce looks sound, short of another global issue that no one foresaw/factored in to the pricing. While prices won’t go back to pre Ukraine levels they will continue to drop with electricity consistently being below 25p/kwh and gas around 6p/7p/kwh at retail dependent on both credit and sector.
In terms of the generation picture wind has been over 40% this past week, with renewables as a total at 47.2% of total UK electricity generation. This is good for the future and helps to keep prices under control in the present. More wind = lower prices.
|Gas: Gas prices settled mixed yesterday. With prompt prices falling due to milder weather and higher forecasted outputs from Wind generation. The UK expects to receive four LNG Cargoes, continuing a healthy supply. Later curve contracts rose with the risk of colder weather towards the latter stages of Winter.
Power: Power prices largely tracked the underlying Gas market yesterday, with an expectation of Wind generation to rise 20% above seasonal norms over the next two weeks. UKA’s fell 3.5% yesterday, softening the further out contracts.
Crude: Oil prices rose yesterday, despite the sanctions on Venezuela easing to allow more exports into the market. Pricing support is continued to be found with the ongoing conflict in the Middle East.
Carbon (EU ETS): The ICE Dec-23 closed at €81.76/t yesterday. Opening at €81.81/t the contract is currently trading at €81.91/t.
Carbon (UKAs): The ICE Dec-23 fell to £42.96/t yesterday. Opening at £43.00/t, the contract is trading at £42.85/t at the time of writing.