Brent crude has eased in overnight trading on Asian markets

Following two days of above normal demand, demand on the UK gas system fell back on Friday

Following two days of above normal demand due to unseasonably cold weather, demand on the UK gas system fell back on Friday. Wind generation displaced some gas-fired power generation and commercial demand fell off heading into the weekend. The system was finely balanced in the morning but as demand fell off through the day, line-pack was forecast 7MCM long at close of business. Movement on the prompt gas market was varied with the day ahead gaining just 0.05p but the week ahead contract for this week was up by 0.75p. Near futures contracts recorded gains averaging 0.52p.

The prompt power market remained volatile on Friday

Baseload power futures tracked gas prices higher lower on Friday, ignoring further weakness on the carbon market. The front month recorded the biggest gain, adding £0.50 to settle at £42.90/MWh. Carbon prices fell further on the day with EU ETS unit prices shedding 60 cent and more to settle at a 5-week low. The prompt power market remained volatile on Friday with the day ahead contract gaining £8.50 to £47.00/MWh. As demand is forecast to exceed the seasonal norm today. The full week ahead contract for this week was down fractionally however as wind generation levels are forecast to pick up this week.  

 Crude oil finished the week on softer note with Brent crude easing by 15 cents

Crude oil finished the week on softer note with Brent crude easing by 15 cents to $41.92 a barrel. Despite recording minor gains midweek, the global benchmark finished $1.23 lower week-on-week. The market was mainly influenced by the broader stock market and currency movement over the past week, a strengthening dollar maintaining downward pressure against any hopes of increasing demand. The trading range was limited to 63 cents over the week with Brent crude breaking above $42.00 a barrel only once. Carbon prices fell further on the day with EU ETS unit prices shedding 60 cent and more to settle at a 5-week low.  

Demand on the UK gas system has risen to over 200MCM this morning

With lower temperatures and subdued wind availability, demand on the UK gas system has risen to over 200MCM this morning. The system is currently forecast 3MCM short as the supply side has been slow to respond to the highest demand level in 6 months. Not unusually for a Monday, trading at the NBP has been slow to commence and, as yet there are no bid-offer spreads to indicate market direction this morning. On the oil market, Brent crude has eased in overnight trading on Asian markets as no fundamental price drivers are in play and the U.S. dollar exchange rate is largely unchanged against other major currencies.