GB power futures tracked gas and carbon prices higher

Demand on the UK gas system fell below 340MCM as temperatures increased slightly

Demand on the UK gas system fell below 340MCM as temperatures increased slightly and wind generation picked up yesterday. The system opened in balance and by the end of the trading day, was forecast 5MCM long as LNG send-out increased over the course of the day. Spot gas prices were little changed day-on-day as within day and day ahead contracts gained 0.25p but the week ahead and balance-of-month contracts gained 1.35p as colder weather is expected to drive demand higher. On the gas futures market, Q1 21 gained 0.38p and Summer 21 was up by 0.50p but movement further out the curve was marginal.  

 Prompt prices pulled back again as demand on the GB grid was forecast lower for today

GB power futures tracked gas and carbon prices higher on Wednesday but gains on the remaining winter months were limited to around £0.50/MWh day-on-day. Seasonal contracts beyond the front summer recorded only marginal movement in either direction. Carbon prices edged higher on the day, closing on €30.00 per tonne again. Prompt prices pulled back again as demand on the GB grid was forecast lower for today with wind remaining a significant contributor to the generation stack. Wind generation topped 5GW yesterday with gas-fired plant contributing just under 50% of overall demand.  

Brent crude gained fractionally on the day

Weekly U.S. inventory data released yesterday showed a massive increase in crude oil stocks and refined product indicating the extent of demand destruction in the States. Crude oil stocks in the U.S. gained 15 million barrels week-on-week to stand at over 500 million barrels. Hopes for a coronavirus stimulus package helped offset much of the bearish news on inventories, while optimism regarding a virus vaccine also offered support. As a result, West Texas Intermediate fell by only 5 cents to $45.52 while Brent crude gained fractionally on the day. The global benchmark was up by 4 cents to $48.86 a barrel.  

Carbon prices are also strengthening with EU ETS unit prices all trading above €30.00 per tonne

While the UK gas system is forecast to finish in surplus, the supply-demand situation at present shows supply lagging by almost 40MCM. Prompt gas products have yet to trade but near futures contracts have opened sharply higher. The front month is up by over 2.00p while Summer 2021 has gained 1.33p over last night’s closing price. On the wider energy markets, crude oil has gained 37 cents overnight while carbon prices are also strengthening with EU ETS unit prices all trading above €30.00 per tonne this morning.