Carbon prices are relatively stable

 Prompt gas prices gained strongly

The healthy supply-demand balance which prevailed early Friday turned negative by the close and is forecast to be much tighter on Monday as renewable power supply is forecast to fall to less than 3GW, prompting higher gas demand for power generation.  Prompt gas prices gained strongly as a result, within day gaining 3.25p while the day ahead contract for today gained 4.05p.  Early movement on the UK gas futures market saw near futures prices gain around 2.50p and this level of gain was sustained to close of business on Friday.  

Higher gas and carbon prices on Friday

Higher gas and carbon prices on Friday pushed GB baseload power prices higher on the day with gains averaging £2.00/MWh on near futures contracts.  Cooler weather with better wind availability for August limited the upside on the front month but futures contracts for the rest of the year saw significant gains day-on-day. The day ahead contract gained £7.75/MWh on higher fuel prices and forecast lower renewable generation levels today.  Wind and solar generation were forecast to pick up over the week however and the week ahead price for this week gained less than £1/00/MWh.    

Crude oil prices steadied on Friday

Crude oil prices steadied on Friday as the market adsorbed the likely impact of the Saudi-UAE compromise on production quotas.  The market expectation is that production levels will rise gradually over the remainder of the year, matching anticipated demand growth.  This strategy is somewhat questioned by the rise in corona-virus infection in major population centres around the world.  The mildly bullish mood on the market on Friday reflected these concerns with Brent crude gaining just 12 cents day-on-day while the week-on-week outcome was bearish with the global benchmark shedding $1.96 a barrel.  

Wind generation is negligible but solar is picking up this morning

The UK gas system is forecast 10MCM long today despite power demand outstripping all other demand.  Wind generation is negligible but solar is picking up this morning.  The volatility which has become commonplace on the UK gas market of late is again in evidence as near futures gas prices have opened 5% up on Friday’s closing levels with gains of over 4.00p.  Prompt contracts have yet to trade but can be expected to rise also.  On the wider energy complex, crude oil has shed a further dollar and Brent is currently trading at $72.50 a barrel.  Carbon prices are relatively stable this morning.