UK Power Pricing Trends | 30 April 2021
Unseasonably cold weather, a bullish gas market narrative and surging carbon prices gripped the U.K. power market last week – sending forward contracts higher across the curve. Although rising week-on-week, U.K. wind generation remained relatively muted which, combined with a 20% drop in average temperatures and higher feedstock prices, exaggerated spot market gains in the U.K. power market.
UK Natural Gas Pricing Trends | 30 April 2021
A noticeable decline in average U.K. temperatures and the subsequent 20% week-on-week climb in gas demand for heating continued to stall gas storage reinjection last week. April is historically associated with climbing temperatures, declining gas demand and high storage reinjection rates. The opposing dynamic, witnessed again last week, lent significant support to curve prices and further exacerbated the steep backwardation in forward contracts. Furthermore, the spread on Europe-Asia LNG prices widened last week which, if maintained, will likely promote the diversion of LNG cargoes away from Europe. Additional support was lent from gains in carbon and coal which, by increasing the relative profitability of gas for power generation, bolstered the demand-side outlook for gas.
UK Energy Complex | 30 April 2021
The cost of carbon for European emitters climbed 15% in April alone as a fifth consecutive week of gains saw carbon EUAs notch yet another record high. Last week saw EUAs trade almost entirely in overbought territory as the compliance deadline drew to a close. Trade data showed another big rise in market participants as bullish sentiment over the bloc’s ambitious carbon reform promoted further speculation in the world’s largest carbon market. Elsewhere, Brent climbed on declining U.S. petroleum supplies and signs of stronger demand, which seemingly fortified expectations for a revival in global consumption – despite rising COVID-19 cases across India and Brazil.
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