Pricewatch | 22 Aug 2022 | Gas Matters Today

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The European carbon price hit a record high on Friday, lifted by soaring gas prices which are in turn supporting gas-to-coal switching in the power sector.

The August-dated EUA contract closed at EUR 97.59/tonne on Friday, with the benchmark December 2022 contract closing at EUR 98.01/tonne after hitting an intraday high of EUR 99.22/tonne. Looking further along the curve, the September 2023 EUA contract closed at EUR 100.17/tonne on Friday.

The European carbon price has been soaring since the start of August, with the rally driven by surging gas prices, which is supporting gas-to-coal switching. The increasing coal burn is driving demand for permits, however supply is tightening.

As for gas, European gas prices diverged in USD/MMBtu terms, with TTF closing 0.7% higher at USD 71.97/MMBtu and NBP down 0.3% at USD 54.43/MMBtu. Prices could close higher today after Gazprom announced late on Friday that it will halt Nord Stream 1 flows for three days in order to conduct maintenance on a compressor unit at the Portovaya compressor station. NS1 flows will stop completely for three days at some point between 31 August and 9 September.

In the US, gas benchmark Henry Hub ended the week on a high, closing 1.6% higher at USD 9.34/MMBtu. The rally was pinned on robust gas demand from the power sector.

Asian LNG marker JKM dipped on Friday, closing 1% lower at USD 57.02/MMBtu.

Crude prices diverged but remained largely stable. Brent closed 0.1% higher at USD 96.72/barrel, with WTI down 0.1% at USD 90.44/MMBtu.

Front-month futures and indexes at last close with day-on-day changes (click to enlarge):

Time references based on London GMT. Brent, WTI, NBP, TTF and EU CO2 data from ICE. Henry Hub, JKM and API2 data from CME. Prices in USD/MMBtu based on exchange rates at last market close. All monetary values rounded to nearest whole cent/penny. Text and graphic copyright © Gas Strategies, all rights.

Contact the editor:

Jana Sutenko
[email protected]

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