Increased wind generation weighed on prompt prices

 Futures were switching between gains and losses for much of the session

Lower demand on the GB gas system countered forecasts for cooler temperatures yesterday as prompt prices eased in the morning but rebounded later when the gas system ran short.  The spot closed 3.50p higher while the day-ahead gained 2.00p to close at 209.05p. Gas demand was 221MCM yesterday and supplies fell behind by 5MCM as Langeled flows dipped to 50MCM during the afternoon.  On the curve, futures were switching between gains and losses for much of the session before settling mixed.  Near months averaged losses of around 3.00p while contracts for the summer and winter recorded more modest gains.

 Generation from wind is expected to rise today

Increased wind generation weighed on prompt prices on Tuesday with the baseload day ahead product falling by over £3.50/MWh.  Generation from wind is expected to rise to 13.0GW today and should continue to displace gas fired plant in the GB power stack. Demand is expected to pick up as temperatures are forecast lower from the weekend. Baseload futures eased yesterday despite some support from higher carbon EUAs and gains in longer NBP curve but losses were modest.  The front month settled £0.50/MWh down at £215.50/MWh while the summer 22 contract closed £0.30/MWh down at £113.45/MWh.

Crude oil prices traded marginally lower for most of the day

Crude oil prices traded marginally lower for most of the day on Tuesday and it looked like both benchmarks were going to post a loss, but prices rebounded late in the session to make a run of three consecutive gains.  Demand for crude oil has rebounded in the U.S. with this week’s inventory report from the Energy Information Administration expected to confirm another large draw on crude oil reserves.  Levels of crude oil at Cushing, Oklahoma, a key U.S. hub, have hit the lowest level in three years, and at 31.2 million barrels is about half the levels in stock at this time last year. Brent settled 41 cents down at $86.40 a barrel.  

The summer 22 contract has reversed yesterday’s gain

Wind generation is up at 13.2GW this morning, and gas demand is down at 208MCM according to the National Grid.  Supplies are forecast long by 12MCM with Langeled flows recovered to 62MCM.  Prompt prices have yet to trade but the bid/ ask spreads would indicate the market will open softer.  NBP futures have traded and contracts for the remaining winter months are down by around 4.00p on average. The summer 22 contract has reversed yesterday’s gain and last traded at 114.05p. Both crude oil benchmarks are over a dollar down this morning with Brent exchanging at $85.23 a barrel.