UK natural gas prices were strong, with 1-month forward price gaining 2.3%. Prices remain supported by colder temperatures expected in the next 10 days, with demand expected to gain c.15-20% over the weekend. Volatility in supply, particularly from the North Sea, is also helping the prices.
US natural gas prices have risen drastically a few days before the storage report on Thursday as the market anticipated the first withdrawal following the injection season. The storage change indeed turned out to be a withdrawal, which was 18 Bcf, 4 Bcf lower than the expected 22 Bcf. The withdrawal was entirely concentrated in the East, where incremental heating demand and power demand from nuclear outages offset the demand destruction caused by Hurricane Sandy.
It was a wild week for the carbon market. On Monday, prices jumped almost €1/t as the EC brought its announcement on planned intervention in the market forward by two days. The announced proposal was that it would remove volumes of 900mt from the cap in the 2013 to 2015 period and would only return it in 2019 and 2020. The proposed number however fell short of the 1.2bn that was rumoured earlier. The following two days the market then fell on profit taking, the start of EC auctions through the centralised platform and confirmation by the EC that 1Q13 volumes would not reflect the back ending.
German power prices gained 0.2% this week while dark spreads gained 9.4% in the same period. The sharp sell-off in CO2 helped dark spreads recover from the lowest level since September 2010. Nord pool was flat this week, due to expectations of high precipitation in the Nordic region in the coming days.
BDI gained 8.9%, reversing its losses of the last week as both Capesize and Panamax rates recovered. For Capesize, the main driver was pick-up in activity on Brazil-China route, while the pick-up in Panamax is largely attributed to booking to India.