Crude oil prices declined for the first time in seven weeks
15 June 2020
Prompt and near futures gas prices gainedDespite a slight fall-off in wind generation, demand on the UK gas system remained subdued on Friday. Deliveries fell short as demand increased to slightly above the seasonal norm and the system finished with a supply shortfall of 5MCM. Prompt and near futures gas prices gained with the front month up by 1.25p and prompt prices recording gains averaging 1.00p. Norwegian deliveries via Langeled fell to just 5MCM over the course of the trading day and storage withdrawals came on too late to balance the system by close of business. The full Quarter 3 contract gained almost a penny, but seasonal contracts eased following Thursday’s big decline in crude oil prices.
UK gas market movement dictated change in GB baseload power futuresUK gas market movement dictated change in GB baseload power futures on Friday with gains of £0.85/MWh on contracts for the remainder of the summer season. As oil steadied following Thursday’s heavy decline, seasonal contacts along the curve were little changed. EU ETS unit prices slipped by 18 cent per tonne. The day ahead contract gained over 10% on a forecast for reduced wind availability today. Wind generation is forecast to drop to 2GW today, down from 8GW on Friday and to average just 3GW for the rest of this week. Solar power is forecast to pick up by around 1GW.
Crude oil prices declined for the first time in seven weeks with Brent crude down by almost 10% week-on-week. Thursday’s major decline of $3.18 a barrel in the Brent price was the defining move of the week. The global benchmark did recover 18 cents on Friday but remained $3.57 a barrel down on the previous Friday’s closing level. The U.S. benchmark, West Texas Intermediate, weakened further on Friday, settling 8 cents down at $36.26 a barrel or 8% lower week-on-week. The oil markets move lower reflects the reality of substantially lower demand despite some revival in global economic activity and the fact that supply still exceeds demand, despite unprecedented cuts in production by OPEC and Russia.
West Texas Intermediate, weakened further on Friday