Bulls became rampant again on the gas market

October contract expired at a record front month price

An 10% increase in demand day-on-day saw the total UK gas system demand rise to 220MCM yesterday.  The system remained well-supplied for most of the trading day but fell short late afternoon as interconnector exports rose to 78MCM.  Early gains had been pared back by midday but the late shortfall saw prompt and near futures surge towards close of business as the bulls became rampant again.  Near futures prices gained an average of 20.00p and the October contract expired at a record front month price of 215.10p.  Similar increases were recorded on the spot and day ahead contracts but the week ahead for the first week of October eased marginally.

Baseload power prices continued to spiral higher

Baseload power prices continued to spiral higher on Wednesday with 5-day price movement of over 25% on near futures contracts for the winter months.  The front month and full Winter 21 contracts settled at £230.00 per MWh and look set to expire at record highs today.  Carbon prices edged back up by 50 cents recovering some of Tuesday’s losses. The day ahead contract remained relatively stable on forecast high wind availability today and over the weekend.  Wind generation is forecast to peak at around 12.5GW over the weekend before falling back during the coming week.

Crude oil prices eased for a second consecutive session

Crude oil prices eased for a second consecutive session with Brent falling back to around $78.50 a barrel yesterday.  Use of strategic stocks of crude in China and India reduced import demand in these countries in September leading to a temporary decline in crude oil exports from Saudi Arabia and other OPEC members.  OPEC is now forecasting a global deficit of 1.1 million barrels per day for the remainder of this year, a prediction which will no doubt inform their thinking when they meet to discuss production quotas on Monday.  The weekly inventory data from the U.S. saw an unexpected rise in crude and gasoline stocks in the U.S. last week, putting downward pressure on West Texas crude yesterday.

 Crude oil has recovered most of yesterday’s loss overnight

Increased wind generation has eased overall gas demand this morning and the UK gas system is forecast 22MCM long for today.  Despite exports totalling over 70MCM to Belgium and the Netherlands, the system is more comfortable today as Langeled deliveries are running at maximum capacity and LNG send out has increased slightly with the arrival of 2 cargoes at the Isle of Grain yesterday.  With LNG storage still well below levels normally seen at the start of winter, near futures prices continue to spiral with prices for the winter months up by an average of 20.00p.  Crude oil has recovered most of yesterday’s loss overnight and Brent is trading just over $79.00 a barrel.