Number of tropical storms off the U.S. gulf coast failed to provide any meaningful support to the market
24 August 2020
Prompt prices fall strongly on the back of lacklustre demandThe UK gas market weakened considerably on Friday, with prompt prices falling strongly on the back of lacklustre demand and a robust supply position. Forecast demand was pitched at just 119 MCM and the system was well supplied with forecast deliveries and actual flows running at around 126 MCM for much of the trading day. Prices for within day and day ahead delivery declined by over 3.00p per therm against the previous days close and this fed through to the futures market with the front month September contract falling by 1.99p at one point before recovering marginally to close the day at 20.91p, down 1.53p. The October contract also saw a sharp decline, losing 1.57p, while the remainder of the futures curve was down by around 0.80p to 1.20p.
Carbon prices fell by around 50 cents per tonneUK power prices continued to ease lower on Friday, reflecting a further downward shift in gas prompt prices and near futures prices, along with a further step down in carbon prices which fell by around 50 cents per tonne. Strong levels of wind generation address to the weakness, both in gas prices and in the power market itself. Wind generation contributed 11,000 to 12,000 MW to the supply. mix for the majority of the day, peaking at just under 14,000 MW during mid-afternoon and satisfying more than 50% of peak demand with peak demand which ran at just over 27,000 MW, or 5,000 MW below the previous day. Against this, gas fired generation only contributed around 5,000 MW to the supply side.
Crude oil futures eased lower on Friday, with Friday’s decline broadly equating to the decline for the full week as the market continues to remain broadly rangebound through July and August, with prices largely stuck in the range of $43 to $45 a barrel. At that price level, the market remains more or less at a mid-point between its $66.00 price at the start of this year and its recent low of $19.99 a barrel, set on the 27th of April. Even concerns around a number of tropical storms off the U.S. gulf coast failed to provide any meaningful support to the market on Friday, although market commentators see weather factors as the greatest potential driver of change for the market through this week and next week.
Crude oil futures eased lower on Friday