The oil market ended the week at a 5-month low
02 November 2020
Near futures contracts recorded losses for a fifth consecutive dayAbove average temperatures and record high wind availability saw demand on the UK gas system fall below 200MCM on Friday. An early supply deficit was reversed as demand fell and the system finished 12MCM long. With high wind generation levels also forecast for Monday, within day and day ahead gas contracts shed 3.65p and 3.50p respectively. The week ahead contract for this week was down by 1.65p. Near futures contracts recorded losses for a fifth consecutive day with the new front month contract for December shedding 0.57p a penny while Q1 2021 was down by 0.90p and prices for the full year 2021 fell by the same amount.
GB power futures completed a 5-day uninterrupted run of losses on FridayGB power futures completed a 5-day uninterrupted run of losses on Friday as weak fuel and carbon prices softened the market. The November contract, which expired on Friday, was the biggest loser of the day, shedding £0.70 to finish at £47.65/MWh. Carbon prices steadied on Friday but still finished €1.80 per tonne lower week-on-week. The day ahead contract shed almost £5.00/MWh with falling demand and forecast high wind generation levels today. With temperatures above normal, demand on the GB power grid is currently running at 33GW of which wind is contributing 11GW and CCGT just 8GW.
The oil market ended the week at a 5-month low as covid-related lockdowns were extended throughout Europe and elsewhere, suggesting an extended period of weak demand. Brent crude settled just under $37.50 a barrel and was down $4.31, or 10.3%, week-on-week while West Texas was also down 10% finishing the week at $35.79 a barrel. The week-on-week decline was the steepest since the peak of infections from the first wave of the coronavirus in April. The current decline is exacerbated by burgeoning supply, particularly in the U.S. where drilling activity hit a 5-month high last week.
The week-on-week decline was the steepest since the peak of infections