The global benchmark fell for 4 of the 5 sessions

On the prompt, the week ahead contract gained

Western European markets continue to show concern for supply and this concern has moved beyond the front winter contract as Summer 22 gained over 10% last week.  There was less volatility on the market on Friday with gas price movement at the NBP of less than a penny on most futures contracts on the day.  The only exceptions were the front winter and Summer 22 contracts which gained 1.77p and 1.74p respectively.  Despite the calmer end to the week, near futures contracts still recorded gains of 4.29p to 6.48p week-on-week.  On the prompt, the week ahead contract gained 1.55p as wind generation levels are forecast lower this week.  

 Front month base-load power price eased

The front month base-load power price eased fractionally on Friday but the Q4 and Winter 21 contracts both gained £0.45/MWh.  The Summer 2022 contract recorded another strong gain, adding £1.40 to settle at £73.95/MWh.  Gas supply continues to worry the market but additional gains in emissions prices added further upward pressure to power prices on Friday. The day ahead baseload prices jumped by more than £10.00/MWh as renewable generation is forecast to decline on Monday.  Wind power accounted for 34% of the power stack on Friday with gas a distant second at 20%.  The hierarchy is forecast to be reversed today however.  

Crude oil markets turned lower

Having started the day in bullish mode on Friday, crude oil markets turned lower with Brent shedding 59 cents to settle at $70.70 a barrel.  The global benchmark fell for 4 of the 5 sessions last week and finished $5.63 a barrel lower week-on-week.  Thursday was the exception to the downward trend as oil prices gained on fears of an escalation in the Israeli-Lebanese conflict but the situation was calmer on Friday and concerns over the renewed spread of Covid-19 in major economies such as the China, Europe, Japan and the U.S. cooled the markets considerably.  A further strengthening of the U.S. dollar also added downward pressure to the oil market as the U.S. posted near record job creation figures for the previous week.  

Wind generation has halved from Friday’s level

Overall demand on the UK gas system is running at 132MCM this morning as wind generation has halved from Friday’s level.  The system remains comfortably supplied and is forecast 10MCM long today.  In addition to the increase in gas-fired power demand, storage injection rates have picked up to 25MCM as buyers abandon hopes of any significant decline in prices between now and the start of the winter.  Early trading on the futures market suggests some softening in near futures prices but trading is thin and directional signals are unclear.  On the oil market, the Covid factor is again at play and prices are down by $2.50 in early trading this morning.