Crude oil markets became concerned that the U.S. presidential election may be taken to the courts

06 November 2020

Demand was well above the seasonal norm at 275MCM yesterday

The UK gas system ran with a surplus of over 10MCM at times on Thursday but the strong demand due to cooler temperatures drove UK gas prices higher. Demand was well above the seasonal norm at 275MCM yesterday and with LNG send out topping 70MCM, the highest levels since May, the UK gas system still called on storage reserves to shore up supplies. The markets reacted with the spot and day ahead gaining almost a penny each while near NBP curve futures contracts added over 1.50p. Contracts did retreat off intra-day highs late in the session as crude oil prices started to ease.  

Baseload power futures closed higher after strong support from the gas and carbon markets

Baseload power futures closed higher after strong support from the gas and carbon markets yesterday. The power curve moved up by over £1.00/MWh on average as the front month settled at £48.15/MWh. Gains of an average of 2.8% to the NBP curve, coupled with 3.5% increases in Carbon EUAs provided the upward momentum. Forecasts for low wind generation in the UK while demand is expected to increase put pressure on the prompt contracts yesterday. Baseload for the day ahead had declined by £9.75/MWh on Wednesday but settled £3.45/MWh higher yesterday.  

After three days of recovery, crude oil prices eased on Thursday

After three days of recovery, crude oil prices eased on Thursday as the U.S. presidential election remains unsettled while more lockdowns commence across Europe. Brent had gained $3.77 a barrel this week until yesterday when the global benchmark posted a loss of 30 cents a barrel. The short rebound in crude oil prices was halted as the markets became more concerned that the U.S. presidential election may be taken to the courts to be decided as the incumbent sees early leads in key states being eroded. In Europe concerns that the new round of lockdowns in France, Germany and the UK will hit demand recovery for another month at least.  

The crude oil markets have continued to decline this morning

The crude oil markets have continued to decline this morning and yesterday’s losses have been consolidated in early trading activity. Brent last traded at $39.99 a barrel, down 94 cents while WTI is already over a dollar down. In the UK, gas demand is a little below Thursday’s levels and are at 265MCM while supplies are forecast to run with a modest surplus. There has been little activity on the NBP prompt thus far, however, the day ahead is over a penny down on yesterdays close. In the futures market, the December contract has declined by 0.89p while the front season has yet to record an exchange.