In the crude oil markets, both benchmarks have continued to rise overnight

25 November 2020

The gas markets opened firmer on Tuesday and after few hours of sideways trading

The gas markets opened firmer on Tuesday and after few hours of sideways trading, prices continued to rise late in the session. The remaining months of the winter settled around a penny higher while contracts after the winter racked up gains of around a half a penny. The energy markets remained buoyed by news of the Oxford vaccine as there were increases in crude oil and carbon also. On the prompt, all products recorded increases of over 1.50p as cooler temperatures and lower wind generation lifted demand on the UK gas system. Gas demand was 241MCM, but supplies were comfortable with a modest surplus for most of the session.  

As gas futures on the NBP rose yesterday there was a similar showing in GB power futures on Tuesday

As gas futures on the NBP rose yesterday there was a similar showing in GB power futures on Tuesday with remaining winter month contracts closing over £1.10/MWh higher on average. Further out gains were more modest as baseload contracts from the summer settled around £0.45/MWh up on average. Baseload for the day ahead rose sharply on Tuesday as forecasts for lower wind generation coupled with cooler temperatures are expected to put a squeeze on supply margins. Margins were negative at times yesterday and the day ahead product gained £4.62/MWh.  

The crude oil markets continued to be buoyed by the latest vaccine news

The crude oil markets continued to be buoyed by the latest vaccine news and Brent added $1.80 a barrel yesterday or $4.66 over the last three days. Both benchmarks are now at the highest levels since early March. The markets seemed unconcerned with the latest figures from the American Petroleum Institute yesterday which showed a larger than expected gain in U.S. stocks last week as demand is impacted by increased Covid-19 restrictions. There are some fears that the Thanksgiving holiday will cause a further surge in new cases across the States. OPEC are due to meet over the weekend and it now seems likely they will agree to defer the increase in production planned for January 2021.  

Cooler temperatures and lower wind generation has UK gas demand forecast at 275MCM for today

Cooler temperatures and lower wind generation has UK gas demand forecast at 275MCM for today and supplies are struggling to match demand even with LNG send out increasing to 70MCM. Prompt prices are set to open stronger although only the day ahead product has exchanged so far and is 1.50p higher. The December contract is 1.10p higher in early trading while longer futures are up by around 0.35p. In the crude oil markets, both benchmarks have continued to rise overnight in Asian markets and early trading across Europe with Brent last exchanging at $48.48, up 62 cents a barrel.