Baseload power futures declined across the board
18 November 2020
The UK gas system operated with a surplus and line pack was expected to grow by some 14MCM by the closeAs mild weather continued across the UK and Ireland forecast gas demand reduced day on day to just 195MCM. The UK gas system operated with a surplus and line pack was expected to grow by some 14MCM by the close. The more positive fundamentals came about as a result of increased wind generation and a reduction in distribution/heating demand. The outlook for the rest of the week is forecasting some more seasonal temperatures but nonetheless the positive supply demand balance is expected to be maintained. UK gas prices opened softer and the decline in premium over the course of the day saw much the increases from Monday’s rally wiped out.
As with the gas market, GB power fundamentals were positive on TuesdayAs with the gas market, GB power fundamentals were positive on Tuesday and this allowed the market to give up the premium added in the previous session. Peak demand in the UK topped 40GW and this was well covered by the various sources of generation. Wind generation peaked at 11GW while imports into the UK via the various interconnectors came in at 4GW. The day ahead contract gained £0.60/MWh despite forecast higher wind generation for today and the rest of this week. Baseload power futures declined across the board on lower gas and carbon cost. On average the power market finished down by £0.85/MWh.
Crude oil markets seemed to shake off the positive news on potential Covid 19 vaccines and once more looked to more fundamental signals for direction. While the positive news on both the Pfizer and Moderna gave the market, some cause for optimism and caused some uplift in pricing, yesterday’s market saw some of this premium fade away. The continuing climb in cases across the globe and in the increasing restrictions in the U.S. in particular has caused the crude market weaken. While demand has improved in recent times it is still well below where it needs to be to provide a positive signal to the market.
Crude oil markets seemed to shake off the positive news on potential Covid 19 vaccines