West Texas Intermediate, fell on Friday.

 A sharp decline in crude oil prices on Friday saw gas futures fall lower on the day

The UK gas system enjoyed a comfortable supply-demand balance on Friday as Norwegian deliveries ramped up to seasonal levels with Langeled flowing 70MCM. A sharp decline in crude oil prices on Friday saw gas futures fall lower on the day to finish the week down by 3.5%. While such a weekly decline is not exceptional, it is perhaps unusual at the start of the winter season. Prices for the winter months fell by an average of 0.80p while seasonal contracts for summer 2021 and averaged slightly higher losses. Despite the well-supplied system on the day, prompt prices recorded gains of up to 0.85p.

Baseload power futures tracked gas prices lower again on Friday

Baseload power futures tracked gas prices lower again on Friday with losses along the curve averaging £0.80/MWh. The new front month contract for November shed £1.05 to settle below £50.00/MWh. The downward trend was helped by improved French nuclear availability which was evidenced in increased UK imports from France in recent days. The day ahead contract gained £0.75/MWh, ending a week of highly volatile trading. Wind availability continues to drive that volatility and is likely to continue to do so. Storm Alex was predicted to pass over the weekend but the forecast for the full week is for steadier wind generation and the week ahead shed £1.00/MWh.  

Crude oil prices fell for a fourth day in a row

 Crude oil prices fell for a fourth day in a row with Brent crude shedding $1.46 to settle at $39.27 a barrel. The global benchmark was down $2.65 a barrel week-on-week. The U.S. benchmark, West Texas Intermediate, fell by $1.60 on Friday as the general concern over demand recovery in the U.S. was amplified by news that President Trump has contracted the coronavirus. The market remains sceptical that OPEC members and other major producing countries will stick to cuts meant to avoid oversupply as the world grapples with the resurgence of the virus.  

A rapid increase in demand on the UK gas system has left supply lagging

A rapid increase in demand on the UK gas system has left supply lagging by 18MCM this morning. The high winds over the weekend have fallen off, causing a big increase in gas-fired power demand. Norwegian deliveries are making up almost half of total supply with LNG send-out at just 10MCM and no storage withdrawals coming on to supplement supply as yet. The prompt market response is not yet clear as no trades have been recorded but bid prices suggest an increase on Friday’s closing positions. The front month has gained 1.25p in early trading and crude oil is also recovering some of Friday’s loss with Brent crude trading just under $40.00.