CCS Weekly Market Report

 

This week:

 

  • Prices for W22 back up to the record levels set in March, dragging ’23 contracts higher

  • Russian gas flows through Nord Stream 1 remain at only 40% of normal, and the market is nervous that flows may not return at all after the upcoming planned maintenance 
  • European storage restocking has slowed following the reduction in Russian gas receipts
  • UK near term gas prices are at a significant discount to other European markets, prompting gas exports at maximum capacity and strong gas for power demand to support electricity exports to France
  • Global LNG markets tighten as Freeport outage extended by 1 month, strike curtails Australian loadings, and market digests implications of Russian decree to transfer ownership of the Sakhalin-2 LNG project

 

  • Power contracts march higher in line with higher gas and carbon prices 
  • Liquidity in markets is drying up as counterparty credit becomes ever more challenging
  • French electricity prices have rocketed over the past week on low nuclear availability and high temperatures, so strong UK exports can be expected to continue
  • UK energy market reform? UK government is reportedly drawing up plans to limit the influence of gas on power prices

 

Oil prices rose earlier in the week on G-7 discussions of a Russian oil price cap plus reports that spare production capacity in the Middle East was even lower than thought. Later in the week concerns about the state of the global economy came back to the foreCarbon prices had a strong week despite the relatively modest position eventually adopted by the European Council on the upcoming carbon market reform package. Prices pushed higher on a combination of technical buying and increased hedging demand for coal-fired power production, though possible global economic slowdown could certainly cap further upsideHaving risen sharply earlier in June, on the planned return of coal fired generation to deal with the gas emergency in Europe, coal prices over the past week have been relatively static. Stockpiles at European terminals are at historically high levels, and despite high temperatures across much of Asia elevating power demand, we’ve not seen reports of strong buying interest for coal.

Posted by Crown Commercial Service Trading Team