Modest losses in gas and carbon prices

Within day and day ahead gas prices eased

The uncertainty which pervaded the UK gas market on Thursday was overcome by bearish sentiment on Friday despite a sharp rise in demand.  Storge injection rates soared to over 60MCM but the system remained in surplus throughout the day with strong Norwegian deliveries and finished the trading day 10MCM long.  The ramp-up in storage injection came amid fears for Russian deliveries to Western Europe for the remainder of the year.  Within day and day ahead gas prices eased again but losses were modest compared to Thursday.  The week ahead contract fell by 5.86p however and balance-of-month gas shed 4.40p.  Near futures contracts shed an average of 2.50p.

Significant losses on the near futures power contracts

Falling gas and carbon prices saw significant losses on the near futures power contracts on Friday.  The front month shed £2.45/MWh while prices for the front winter months were down by an average of £1.50/MWh.  Gas prices eased for a second consecutive day, as did carbon prices, helping ease the recent upward pressure on the power market. The robust renewable power output of over 13GW is forecast to fall off over the weekend and the day ahead price for Monday gained £5.50/MWh.  Wind generation was more than double gas-fired production on Friday while solar also contributed significantly on the day.  

Brent crude shed 72 cents

Thursday’s slew of reports and conflicting global oil demand projections were assessed, and it seems that the International Energy Agencies view prevailed on Friday.  That view is based on the continuing spread of coronavirus in major Asian oil consuming countries, as well as in the U.S. and projects much lower demand growth over the remainder of this year.  Brent crude shed 72 cents to settle at $70.59 and remain entrenched above the $70.00 mark, for now at least.  West Texas Intermediate was down by 65 cents to $68.44 a barrel.  A weakening of the dollar exchange rate against other major currencies failed to provide any significant support to the market on Friday.  

 Brent is down by over a dollar a barrel

The latest data from China has showed economic activity has slowed in July with manufacturing and sales growth all down on expectations as the Delta strain of the coronavirus spreads through the worlds second highest consumer of oil.  Brent is down by over a dollar a barrel this morning with the last trade going through at $69.56.  In contrast, the NBP futures have bounced back after Friday’s losses and are rising sharply with the September contract over 5.00p up in early exchanges.  Trading on the prompt has been slow to get off the marks but the spot and day ahead are likely to open between 4.00p and 5.00p higher also.