Demand on the UK gas system has increased further overnight
Demand on the UK gas system has increased further overnight as temperatures across Britain and Ireland dipped below freezing in many parts. The system remains well-supplied however with deliveries currently forecast to outstrip demand by 5MCM. Within day gas has yet to trade this morning but day the ahead contract has gained fractionally. Trading on the futures market has been light so far with little movement showing as yet. An announcement by Saudi Arabia of a further cut in that countries crude production rate has stemmed losses on the oil market temporarily at least and Brent crude is trading just under $30.00 a barrel this morning.
GB baseload power futures tracked gas prices lower on Monday
GB baseload power futures tracked gas prices lower on Monday with losses on the remaining summer months but gains on seasonal contracts along the curve. While the front month was unchanged, losses on Q3 contracts averaged £0.25/MWh and extended into Q4, which fell by £.030 to £39.50/MWh. Day ahead baseload power gained sharply on a forecast halving of wind generation today. With temperatures well below the seasonal norm, demand is expected to increase again today, with an increase in gas-fired generation driving the day ahead price higher by £5.50/MWh.
Brent crude has recovered over the past 3 weeks
Having fallen below $20.00 a barrel in late April, Brent crude has recovered over the past 3 weeks, gaining over 50% to settle at almost $31.00 a barrel on Friday. As weak demand continues to weigh on the market, nullifying the deeper production cuts introduced at the beginning of the month, the global benchmark crude slipped below $30.00 again, settling at $29.63 on Monday. The U.S. crude benchmark, West Texas Intermediate for delivery in June, ended the day down 2.4% at $24.14 a barrel yesterday. As the WTI contract for June delivery expires next week, further losses may be seen as traders seek to off-load volumes that may not be needed and for which storage is limited.
Demand on the UK gas system has increased further overnight
Demand on the UK gas system has increased further overnight as temperatures across Britain and Ireland dipped below freezing in many parts. The system remains well-supplied however with deliveries currently forecast to outstrip demand by 5MCM. Within day gas has yet to trade this morning but day the ahead contract has gained fractionally. Trading on the futures market has been light so far with little movement showing as yet. An announcement by Saudi Arabia of a further cut in that countries crude production rate has stemmed losses on the oil market temporarily at least and Brent crude is trading just under $30.00 a barrel this morning.
