Brent crude has fallen back from an overnight high
26 November 2020
Demand on the UK gas system increased sharply yesterday morningDemand on the UK gas system increased sharply yesterday morning with falling temperatures and lower wind availability. The system quickly fell into deficit and remained short to close of business as demand continued to increase throughout the day, peaking at over 280MCM. Early gains on the prompt market were retained with the spot price gaining 1.75p on the day and remaining prompt prices recording average gains of 1.50p. Gas futures continued to rise with support from the ongoing rally on the oil market, but increases were modest compared to the previous 2 days.
The GB power market recorded strong gains on near futures contracts yesterdayThe GB power market recorded strong gains on near futures contracts yesterday as fuel and carbon prices rose again. A forecast slump in wind availability today, while impacting more directly on the day ahead contract, reminded traders of the vulnerability of supply to wind variation and had a knock-on effect on near futures prices. Falling temperatures along with a forecast slump in wind generation saw the day ahead spike by £20.00/MWh. Wind generation fell from 8GW on Tuesday to just 3GW yesterday and is forecast to contribute only 0.5GW today.
Oil market sentiment remains bullish on hopes of increasing demand as Covid-19 restrictions are eased once mass vaccination begins. Brent crude gained a further 75 cents to settle at $48.61 a barrel. US bench-mark oil prices finished higher for a fourth straight session, settling at an eight-month-high $45.71 a barrel following a decline in US crude-oil inventories revealed in the weekly inventory report from the U.S. Energy Information Administration. While distillate product stocks in the U.S. increased week-on-week, the market is currently optimistic that demand will increase in the New Year, with Europe and the Far East emerging from lockdown.
Oil market sentiment remains bullish on hopes of increasing demand