CCS Weekly Market Report

 

This week:

  • Prices up with retracement of last week’s losses

 

Gas

  • LDZ up but still ~19% below 5-year avg demand
  • Weather dropping back to seasonal normal, lifting near term prices.
  • Freeport’s reopening looks like it will be delayed as there are reports of cargos being cancelled for Nov and Dec, and no formal restart request posted with regulators
  • German LNG terminals looking positive, and 3 may be ready by end of year
  • EU commission working on a price ceiling that would be activated if TTF hits pre-defined level and spread to world markets (i.e. global LNG) exceeds set level
  • European storages at 95.4%, UK MRS full, Rough 85% full.

 

Power

  • Prices have largely retraced back up this week from Friday, but far back end has fallen
  • Demand up w-o-w, but 10% below average
  • Autumn Budget announcements:
  • Commitment to deliver Sizewell C
  • Plan to reduce the energy consumption by 15% by 2030 via energy efficiency improvements
  • 45% tax on revenue above £75 MWh from low-carbon UK electricity generation until 2028
  • Domestic energy price support scheme extended an extra 12 months with new cap
  • A Treasury-led review to determine support beyond March ‘23 for non-domestic customers but excluding public sector organisations
  • French nuclear availability is at 52%

 

Wider Commodities 

 

Prices continued lower w-o-w as China reported highest daily number of new cases since April and the dollar strengthened. The Druzhba oil pipeline halted follows after artillery hit a power station powering it, but restarted on Wednesday. U.S crude stocks fell by 5.4 million bbls on high refining activity.Carbon prices fell this week, after closing up on Friday. Prices rallied on Tues wiping out last week’s loses, as the market seemed to be driven fundamentals rather than the next round of RePowerEU talks, which were seen as unlikely to bring solid outcomes. UKAs fell sharply on Tuesday ahead of the Wed auction, recovering slightly in the afternoon. The UK auction on Wed had the lowest settlement for the front Dec contract in a year. UKA premium has been narrowing recently.Coal prices retraced upwards after hitting 8-month lows. Weak seaborne demand in Asia is keeping prices under pressure, but a change in sentiment is expected if China’s lockdowns ease. Demand in Europe is also muted due to mild temperatures and healthy stockpiles. The volume of thermal coal derivatives traded on the European exchange CME in October was down 73% m-o-m and 95% y-o-y. This is seen as being expected due to price volatility and mild temperatures stifling demand.

Posted by Crown Commercial Service Trading Team