UK gas prices fell lower again yesterday
UK gas prices fell lower again yesterday as extreme volatility punctuated the market with an intra-day swing of almost 15.50p on the front month contract. September fell as low as 103.05p very briefly in the afternoon before rallying strongly towards close of business to settle at 111.61p or 5.04p down on Tuesday’s close. The steep decline came as news of initial flows of gas into the Nord Stream 2 pipeline broke, sending Western European markets into a downward spiral. The fact that this was only pre-commissioning gas tempered the market mood. The downturn of the past 2 days almost completely reversed the step increase in prices seen on Monday as Q4 prices fell by just under 5.00p yesterday and the full Winter 21 contract was down by 4.29p.
GB baseload power prices fell for a second consecutive session
GB baseload power prices fell for a second consecutive session as gas and carbon prices eased on Wednesday. Power futures tracked NBP gas prices with sharp intra-day losses before rallying somewhat late afternoon. The front month still closed £6.00 lower day-on-day at £105.00/MWh while losses for the remaining months of 2021 averaged just under £4.00/MWh. Wind generation levels are forecast to slump to less than 1GW today and the day ahead contract soared to a near record high. Day ahead baseload power for today gained £22.00/MWh to finish at £127.57, the second highest settlement on record.
Oil prices continued to ease on Wednesday
The news from Afghanistan did nothing to impact oil prices which continued to ease on Wednesday. Prices fell for a fifth consecutive session, pulling Brent crude further below the $70.00 mark. The relentless rise in Covid-19 cases in Australia, India, Indonesia and the U.S. has raised serious concerns for demand recovery this year. The weekly inventory data from the Energy Information Administration showed a drop in crude stocks last week. This would normally evoke a bullish response from the market but the impact was offset by a rise in gasoline stocks. West Texas shed 90 cents to settle at $65.46 while Brent crude was down 80 cents to $68.23 a barrel.
Prices are falling again with the front month down
Yesterday’s weak supply situation on the UK gas system is improved with forecast deliveries running 15MCM long this morning. The predicted fall-off in wind availability has materialised and wind generation is currently running at less than 1GW. Demand for gas-fired power generation is topping all other demand but robust Norwegian deliveries are maintaining the supply surplus. Prices are falling again with the front month down a further 2.00p and mid-winter months down by over 4.00p as confidence increases that Nord Stream 2 will be online by then. The slide in oil prices continues with Brent down by $2.00 to currently trade at $66.14 a barrel.