Energy market prices have eased

Gas prices for the remaining winter months eased

Gas prices for the remaining winter months eased yesterday as the supply outlook improved with the German Energy Ministry giving the green light to the Nord Stream 2 pipeline.  The limited losses reflected the fact that the pipeline still has several steps to complete, including before final certification which could take up to 6 months.  Given this, the losses on near futures were odd, particularly as prices for Summer and Winter 22, when more Russian gas should be available, increased yesterday.  Contracts for the remaining winter months shed an average of 3.50p while Summer 22 and Winter 22 were up marginally.  Demand on the UK gas system was 10% below the seasonal norm on Wednesday as wind generation of over 11GW suppressed gas-fired generation demand on the day.

GB baseload power futures recorded losses

GB baseload power futures recorded losses well in excess of equivalent gas market contracts on Wednesday.  The power market losses came despite increased carbon prices which moved above €60.00 per tonne for the contract year 2022.  Forecast higher demand with lower temperatures pushed the day ahead contract higher but week ahead baseload power eased as wind generation is set to remain robust.

 Crude oil prices fell heavily on Wednesday

Crude oil prices fell heavily on Wednesday following the release of U.S. inventory data which showed a big build in U.S. crude stocks last week.  The weekly inventory data from the Energy Information Administration revealed crude stocks were up by 4.3 million barrels week-on-week.  The price decline came despite the fact that gasoline and distillate stocks actually fell last week, in what would normally be taken as a sign of demand growth.  The U.S. benchmark, West Texas Intermediate, fell by $2.00 while the global benchmark, Brent crude, shed $1.82 to settle at $84.58 a barrel.  

UK gas prices have opened lower this morning

UK gas prices have opened lower this morning with near futures contracts showing losses of over 20.00p in early trading.  The front month is trading below 200.00p for the first time in a month and December is hovering just above that mark.  Norwegian deliveries are back to full capacity and LNG supply is forecast to increase next month.  The increase in LNG supply is having a more telling and immediate impact on the UK market than the prospect of Nord Stream 2 completion.  Mild weather and ongoing robust wind generation has seen demand on the UK gas system fall to just 205MCM and the system is forecast 15MCM long.  Brent crude is down by 78 cents overnight to $83.80.