Crude oil prices continued to be buoyed

With gas demand expected to tumble today, the day ahead shed 1.60p yesterday

The forecast for milder temperatures to remain across northern Europe coupled with high winds for the remainder of the week pressured gas prices at the NBP prompt on Tuesday. Temperatures in Britain and Ireland are to remain 2-3°C above normal until the weekend while higher wind generation should replace gas fired plants in the UK power stack. With gas demand expected to tumble today, the day ahead shed 1.60p yesterday while the weekend product fell by 2.00p. Natural gas futures settled mixed on the day with near months easing fractionally while stronger crude oil prices prevented losses on the longer curve contracts.  

The power curve responded to declines in carbon EUAs yesterday

Generation from GB wind farms is expected to increase from 5.3GW on Tuesday to above 10.0GW today and even higher for the end of the week. This coupled with milder temperatures for the next few days weighed on prompt power prices yesterday as the day ahead baseload product shed £4.50/MWh to settled at £42.25/MWh. Baseload futures eased for the most part on Tuesday as contracts declined by around 0.7% on average. The power curve responded to declines in carbon EUAs yesterday which fell by around 30 cent per tonne as the 2021 contract settled at €26.39.

The markets are anticipating a reduction in U.S. crude stocks to be confirmed by the E.I.A. later today

Crude oil prices continued to be buoyed by the news that a vaccine may soon be made available while expectations for a reduction in U.S. crude stocks also provided support yesterday. Brent crude for January delivery peaked at $44.11 a barrel before closing at $43.61, up $1.21 a barrel. The U.S. benchmark, West Texas Intermediate, gained $1.07 over the day and closed at $41.36 a barrel. The markets are anticipating a reduction in U.S. crude stocks to be confirmed by the E.I.A. later today which may point to an increase in demand, however, with U.S. new covid-19 cases above 100,000 on each of the last seven days, states like California and Wisconsin are considering increasing restrictions.  

 NBP have yet to trade, but spreads are suggesting further declines on opening

UK gas demand has slipped to 204MCM as expected this morning and supplies are comfortable, running with a modest surplus of 6MCM. Imports through the Langeled feed are close to maximum capacity at 70MCM and LNG nominations are 27MCM for today. After yesterday’s losses, prompt prices on the NBP have yet to trade, but spreads are suggesting further declines on opening. On the curve, futures have responded to the rebound in crude oil prices this week and are around 0.40p higher in early exchanges. Crude oil prices have firmed overnight in Asian markets and early trading in Europe with Brent up by $1.44 a barrel.