Hurricane Laura cleared the Gulf Coast without inflicting major infrastructural damage, crude oil prices eased fractionally

31 August 2020

An unplanned outage, pushed prompt gas prices higher

The programme of planned maintenance on the Norwegian system is due to reduce deliveries by 50MCM throughout the month of September. Despite a comfortable system balance on Friday, an unplanned outage, which reduced Norwegian supply by a further 80MCM over the weekend, pushed prompt gas prices higher. The day ahead contract gained 1.45p to close at a 7-month high of 26.75p. On the futures market, the new front month contract for October gained 2.27p to settle at 28.95p, a 22% rise over the week. while seasonal contracts generally finished over 10% higher week-on-week.

Wind variability continued to cause wild swings in the GB day ahead price

Thursday’s easing on the GB power futures market proved temporary as contracts recorded strong gains across the board on Friday. The market has been bolstered by the recent rise in carbon prices as EU ETS unit prices push €30.00 per tonne. The September contract gained £2.20/MWh to expire at £42.80, up 17% week-on-week. Wind variability continued to cause wild swings in the GB day ahead price which have varied by as much as 25% day-on-day over the past week. Forecast lower wind availability this week saw the week ahead price gain £1.50/MWh.  

 EU ETS unit prices continue to rise

As Hurricane Laura cleared the Gulf Coast without inflicting major infrastructural damage, crude oil prices eased fractionally on Friday. The storm moved inland and was downgraded but analysts say that this was only the first of what is expected to be a particularly active hurricane season. The premium built up prior to the storm on Monday and Tuesday of last week was partly retained with crude finishing 70 cents higher week-on-week. Brent crude settled at $45.05 while West Texas Intermediate settled at $42.97 a barrel on Friday. EU ETS unit prices continue to rise and are pushing €30.00 per tonne.  

Big drop off in wind availability has pushed gas demand higher

Reduced Norwegian deliveries and increased demand have left the UK gas system forecast 25MCM short this morning. A big drop off in wind availability has pushed gas demand higher but the system imbalance will have no price impact as the UK gas market is closed for a Bank Holiday today. Crude oil continues to trade on the NYMEX, and Asian markets of course, and Brent crude has bounced back above $46.00 overnight to currently trade at $46.40 a barrel.