Increasing solar generation is expected to offset some of the lost wind generation

05 May 2020

 Demand on the UK gas system rose to 225MCM

Demand on the UK gas system rose to 225MCM as exports to the continent ramped up to 50MCM on Friday and deliveries into the system were forecast 10MCM short early on and remained so to close of business. Prompt gas prices rose on the supply shortfall with the spot and day ahead contracts gaining 0.90p while the week ahead contract for this week was up by 0.70p. A week of mixed movement on the UK gas futures market ended with losses across the board on Friday, leaving prices lower week-on-week for a sixth consecutive week. The new front month contract for June was the only significant mover, shedding 0.59p to settle at 13.28p.

GB baseload power futures tracked gas prices lower on Friday

GB baseload power futures tracked gas prices lower on Friday with the carbon market closed for the Mayday holiday in mainland Europe. The new front month contract for June recorded the biggest loss of £0.7/MWh on the day while futures contracts were down by between £0.6 and £1.3/MWh week-on-week. The day ahead contract gained slightly while the week ahead for this week eased fractionally with lower wind power forecast for this week. Increasing solar generation is expected to offset some of the lost wind generation to maintain a strong renewable contribution overall.  

West Texas Intermediate finished about 17% higher for the week

The oil market recovery continued in early trading on Friday with Brent crude gaining almost a dollar overnight to trade at $26.21 mid-morning as fresh production cuts by OPEC and Russia kicked in. The early gains were retraced however with Brent crude finishing the day just 4 cents lower but still $1.63 higher week-on-week. US benchmark oil prices finished 5% higher day-on-day at $19.78 a barrel, marking the highest closing level in more than two weeks on growing confidence that as global economies begin to reopen for business, demand for oil will start to increase. West Texas Intermediate finished about 17% higher for the week, marking the first weekly gain in four weeks.

 Friday’s gain of just over a dollar a barrel has been retraced

With the UK Bank Holiday moved to Friday of this week, the UK market is trading, albeit sluggishly, this morning. The only completed transactions as yet are on the front month contract which has gained 0.57p. Bid-offer spreads suggest a modest increase in the day ahead price and the spot price is also likely to pick up as the UK gas system is running a forecast supply deficit of 18MCM. Demand is some 15MCM above the seasonal with nominated exports to Belgium at 38MCM today. On the oil market, Friday’s gain of just over a dollar a barrel has been retraced as the market assesses the likely effect of fresh cuts in production which came into effect over the weekend.