Carbon price pushed gas up last week – oil below USD 60/barrel again
The gas market could not escape being impacted by the carbon price rising more than EUR 3/tonne last week. The coal price also rose and helped push gas up. A drop of around USD 1.50/barrel in the oil price was not enough to outweigh the other inputs.
In contrast to the Nordic power market, where the weather is currently a bullish input, the weather forecasts for much of Europe look mild. Germany looks set to experience above average temperatures for the rest of this year. However, this was not enough to send the gas market lower at the front last week, with the Q1-19 contract rising roughly as much as the rest of year 2019.
As we have mentioned several times before, there are still signs that Europe could experience a cold spell early in the new year. Such long range forecasts always involve a degree of uncertainty, but several indicators are pointing in this direction. If you have exposure to the weather, you should therefore closely watch the weather forecasts in the near future. The cold spell is still far enough away that it is not registering in the normal weather forecasts, but if it does materialise, it will begin to show up at the end of this week or between Christmas and New Year.
The oil price fell almost USD 1.50/barrel last week, where the mood in the broader financial markets as not exactly positive given the frustrating close to the week. This seems to be continuing this week, with the oil price even lower, and below USD 60/barrel again. The gas price is also slightly lower than on Friday for most contracts.
Bullish mood: The market focuses on factors that can make the price go up.
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