Brent has shed further as the market anticipates a relaxation of OPEC production limits
02 March 2021
Demand on the UK gas system climbed above the seasonal normAs gas-fired power generation was called on to provide over 50% of GB power demand, demand on the UK gas system climbed above the seasonal norm yesterday. Wind generation dropped to just 2GW and the surge in gas-fired generation pushed overall demand to almost 320MCM. The system remained short throughout the day and prompt gas prices for the remainder of this week and next gained an average of 2.35p. The front month gained just over a penny while Q2 was up by 0.64p and the full Summer 21 contract gained 0.56p. Movement on seasonal contracts further out the curve was more modest, averaging just 0.29p.
GB baseload power futures recovered Friday’s losses on a combination of rising gas prices and higher demand on the day. The new front month power contract for April gained £0.20/MWh to £51.50 while seasonal contracts for Summer 21 and beyond gained an average of £0.28/MWh. Carbon prices eased marginally on the day. The day ahead baseload power contract jumped another £8.50/MWh as wind generation fell more than forecast yesterday. As wind struggled to generate 2GW, gas-fired generation was called on to provide some 53% of GB demand on Monday and wind is forecast to remain subdued today.
Carbon prices eased marginally on the day
Crude oil prices fell for a third straight session on Monday with the new front month Brent contract for May shedding 73 cents to settle at $63.69 a barrel. West Texas Intermediate shed 86 cents to settle at $60.64 with the expectation that OPEC will ease production limits when it meets on Thursday of this week. WTI has fallen by 4.5% in 2 sessions, its biggest decline 2-day decline in 4 months. The decision facing OPEC is whether demand will pick up quickly enough with Covid vaccination and increase in economic activity to absorb an increase in production. Other major producers, including Russia, are pushing for a relaxation of production limits and U.S. production is almost certain to increase with prices anywhere above $50.00 a barrel.
Crude oil prices fell for a third straight session