Crude oil prices closed higher for the third session

Gas demand was around 20% above the seasonal norm

The GB power and gas markets opened with significant gains on Thursday and the markets continued to firm through the day as temperatures remained just above 0°C. Gas demand was around 20% above the seasonal norm at 405MCM yesterday and an increase in gas fired power generation added to the inflated heating demand. Prompt prices covering the next week gained between 2.30 and 4.10p as the cold spell is expected to break after the weekend. The NBP futures market showed its volatility yesterday and reacted to the gains on the prompt with most of the previous two days losses being reversed  

Supply margins tightened in the UK power grid yesterday

Supply margins tightened in the UK power grid yesterday to the extent that supplies seemed to be short for the first half-hour of the peak demand period. Prompt prices had already rallied through the day as the day ahead reversed some of the previous day’s losses and settled above £100/MWh again. Low wind generation along with the current cold snap is set to keep margin tight until the end of the weekend. In the futures market, higher gas and carbon EUAs combined with the increase in the prompt to boost baseload power futures. Contracts settled between £1.00 and £4.20/MWh higher. Carbon prices rose by €1.13 per tonne as the spot closed at €34.64 per tonne.  

Crude oil prices closed higher for the third session in a row

Crude oil prices closed higher for the third session in a row with Brent settling at a fresh high since the end of February last, although the increase yesterday was modest. The recent agreement between OPEC and Russia to delay their plan for production increases has underpinned the global price for oil this week with some extra comfort coming from the decision of Saudi Arabia to cut its own production levels by 1 million barrels per day in February on concerns that the increasing number nations reintroducing lockdowns will curb demand in the short term. Brent settled at $54.38 a barrel yesterday while West Texas Intermediate gained 20 cents to close at $50.83 a barrel.  

Cooler temperatures are still driving a high gas demand in the UK

The cooler temperatures are still driving a high gas demand in the UK this morning but today is forecast a touch lower at 391MCM. Supplies are robust with a small surplus of just 7MCM forecast as LNG supplies are nominated at 59MCM. The markets have opened with sharp gains once again, as the spot and day ahead products are 3.55p and 3.35p up in the first hour of trading. Those increases have fed into the near curve with the February contract 2.50p up while the summer contract is just 0.45p higher. Brent is exchanging at $54.80 a barrel this morning up 42 cents on the back of a rise in equities.