Second consecutive week of sharp decline in U.S. crude production
10 August 2020
The recent gas price surge slowedLower wind availability on Friday saw UK gas demand increase but higher levels of solar generation meant that the call on CCGT was not as much as it might have been. The recent gas price surge slowed with near futures prices gaining marginally but remaining over 10% higher week-on-week. The front month was up by 6.18p or almost 40% week-on -week as NBP futures all finished above 20.00p for the first time since late April. Seasonal contracts beyond the front winter eased marginally as crude oil prices fell on the day. With lower wind availability and higher demand forecast for Monday, the day ahead contract gained 1.45p to finish the week at 20.00p., its highest settlement in 18 weeks.
Near futures power contracts on the GB market gained strongly on FridayNear futures power contracts on the GB market gained strongly on Friday with the front month contract hitting a 5-month high of almost £40.00/MWh. The near futures power contract gains far outstripped their gas contract counterparts on the day with little obvious cause. Contract further out the curve moved broadly in line with the gas market. The day ahead baseload contract gained £2.00 as renewable generation is forecast lower for today. The week ahead contract for this week was also up, but only slightly, as wind availability is forecast to remain low and import/export
The crude oil price rally of earlier in the week stalled on Thursday and reversed on Friday leaving the global benchmark, Brent crude, just $1.10 a barrel higher week-on-week. Brent slipped by 69 cents on Friday to settle at $44.40 while West Texas was down 70 cents to $41.22 a barrel. The downturn was in response to the ongoing increase in coronavirus cases in many countries and an upswing in many countries where the virus seemed to have been controlled. Concerns over demand recovery were predominant on Friday, despite news of a further fall in U.S. drilling activity last week and a second consecutive week of sharp decline in U.S. crude production.
The global benchmark, Brent crude, $1.10 a barrel higher week-on-week