Annuals and carbon surge as the vaccine rollout starts
Tuesday 22nd December 2020
Markets have been generally buoyant in the last fortnight, predominantly due to the start of the C-19 vaccine rollout. This light at the end of the tunnel has raised expectations of increased energy demand, and the wider energy complex has seen an upturn. Coal, oil, LNG and particularly carbon have seen increased buying.
The short-term power market has also seen a surge, with day-ahead soaring to a 4-year high £120/MWh on 4th December. This came off the back cold and windless weather as well as power station outages. Whilst prices soon corrected, some of the sentiment filtered into the Annual curves.
Gas prices have been pushed higher by lower than expected US inventories, and also by increased Asian demand as colder weather hits northern regions across the continent. This means that there is very little difference in wholesale across Annuals out to 2026, suggesting the April ’21 curve is inflated by short-term factors.