Russian gas flows to Germany through Poland fell yesterday

12 November 2021

The near curve rebounded yesterday

After two days of declines the near curve rebounded yesterday following renewed concerns for winter gas supplies.  Russian gas flows to Germany through Poland fell yesterday which raised concerns of a slower restock in European gas storage facilities.  Later threats of cutting off gas supplies to Europe from the Belarus president added to the upside as he responded to possible sanctions being imposed on his Nation.  Near months closed 13.85p higher on average yesterday with the December contract settling at 193.33p.  Closer to home, Norwegian supplies were curbed by an unplanned outage on Thursday which fed into the prompt leaving the spot and day ahead products to close 15.00p higher.

 Baseload futures settled higher on Thursday

Baseload futures settled higher on Thursday in response to the bullish run in gas prices while higher carbon EUAs also provided support.  The December contract settled at £184.75/MWh gaining £9.25/MWh on the day.  Gains reduced past the remaining winter months and the summer contract added £1.10/MWh to settle at £103.55/MWh. Forecasts for a large increase in renewables weighed on the day ahead product yesterday as it settled £9.70/MWh down.  Wind generation if tipped to exceed 10.5GW on Friday having averaged between 3.0 and 4.0GW on Thursday.

The crude oil prices see-sawed yesterday

The crude oil prices see-sawed yesterday as the markets lacked direction after Wednesday’s significant losses.   Several bearish factors remain with the dollar holding strong against a basket of currencies, while OPEC reduced it’s oil demand forecast for Q4 2021 due to the higher prices and slower than expected growth for China during quarter 3.  U.S. inflation rose to 6.2% this week, the highest in 30 years and it seems the U.S. Fed is to hold back on interest hikes until next summer.  The global benchmark traded in a tight range of $81.66 to $83.44 a barrel before settling at $82.87 up just 23 cents on the day.

 Wind generation is now forecast higher than previously touted

Wind generation is now forecast higher than previously touted and is expected to get up to 13.1GW and this has seen GB gas demand fall to 228MCM for today.  Supplies are long by some 27MCM but this is being ignored by the market as the spot has traded up to 4.95p higher in early exchanges.  On the curve, the front month has reversed off the morning high of 200.00p to last trade at 195.00p and contracts further out the curve are displaying a similar movement with the summer contract now down on yesterdays close at 102.50p.  In the crude oil markets the bearish sentiment is dominating and prices are over a dollar a barrel lower.