Increase in crude oil prices comes about as the Presidential election day in the U.S. arrives
04 November 2020
The UK NBP market was slow to get going on TuesdayThe UK NBP market was slow to get going on Tuesday morning and it seemed the market was taking a break after multiple sessions of losses. Gas contracts firmed a little although in truth prices remained close to the previous settlement. There was little new news to provide direction and gas fundamentals remained on par with recent days. An increase in forecast demand by 40 MCM was the main variable but this was brought about by an increase in demand from the CCGT generation sector. As trading activity increased, premium began to fall out of contracts once again with the front month finishing down by 0.50p at 39.53p. Further out seasonal contracts firmed slightly.
GB day ahead baseload power surged higher on TuesdayGB day ahead baseload power surged higher on Tuesday on a combination of higher demand and lower output from the wind generation sector. Over the course of the day £11.50 was added as the contract closed at £53.50/MWh. As temperature cooled, demand picked up and the minimum supply margin narrowed. As expected, the contribution from wind generation fell to just 3.5GW. The stronger prompt had little influence at the front of the curve where upward movement was minimal. Other near-term contracts declined by £0.75 while further out in the seasonal margin was added on higher crude oil prices.
Crude oil markets continued to recover recently lost premium as contracts extended gains for the second session in a row. The increase in crude oil prices comes about as the Presidential election day in the U.S. arrives. There has been little to suggest a change in overall market fundamentals other than some positive moves on U.S. stocks which typically give a boost to oil. In addition, it is likely that in the context where the outcome of the election remains in doubt, some market participants are looking to cover short positions in an effort to counteract any volatility that might arise post-election. Brent crude closed at $39.78 a barrel, up by 81 cents on the day.
Crude oil markets continued to recover recently lost premium