UK gas market turned bullish again on Friday
The UK gas market turned bullish again on Friday as uncertainty over short to medium term supply again surfaced. While the UK gas system was well-balanced on the day, concerns were raised by falling Langeled flows as more Norwegian gas was diverting to Belgium rather than the UK. There was little good news regarding LNG supply either as only one additional cargo is expected to dock in the UK before the end of September. As has been the trend for the previous 3 weeks, near futures contracts gained over 10% week-on-week. The front month finished some 12.00p below its midweek record high but still at an eye-watering price of 165.25p. A week of extreme volatility finished with prompt contracts gaining between 6.00p and 8.00p.
Carbon turned upwards
GB power futures recovered some of Thursday’s heavy losses as near futures gas prices rebounded. The front month gained £9.30/MWh, but the full Winter 21 contract was up by a more modest £3.00/MWh. Carbon turned upwards following a run of 4 consecutive days of losses. The day ahead baseload contract more than doubled as wind was forecast at less than 2GW for today. A strong pick-up in wind generation from Tuesday onwards saw the full week ahead contract for this week fall by £10 to settle at £215.50/MWh.
Brent crude established a new trading range
Having broken out of a tight trading range around $72.50 at the beginning of the week, Brent crude established a new trading range around $75.00 by the end of last week. The market continued to assess the damage caused by recent storms in the Gulf of Mexico, but oil infrastructure was slowly coming back online by the end of the week. A strengthening of the dollar on Thursday and Friday also helped ease oil prices. Front month Brent crude shed 25 cents to settle at $75.42, exactly $2.50 a barrel higher week-on-week. West Texas Intermediate shed 50 cents to settle at $72.12 a barrel. Carbon turned upwards following a run of 4 consecutive days of losses.
The UK gas system is finely balanced
The UK gas system is finely balanced as more Norwegian gas is diverting to the Belgian hub this morning. Langeled deliveries are running at just over 30MCM with LNG send-out below 8MCM. If Friday saw some easing of the extreme volatility on the gas market, it is back with a vengeance today. Near futures gas prices at the UK NBP are up by over 14.00p in early trading with concerns for winter gas supply again the driving force. The oil market is moving in the opposite direction this morning with Brent crude down by almost a dollar on Friday’s settlement price while carbon emissions prices are also trading lower this morning.