A week-on-week rise of approximately 5% in near futures prices

Prompt gas contracts shed an average of 34.00p but remained just over 200.00p

Early trading at the UK NBP suggested another day of rising prices on Friday but, after posting early marginal gains, prices levelled off and began falling heavily late morning with contracts for the current winter months finishing 23.00 to 24.00p lower day-on-day.  Losses on the day were not enough to prevent a week-on-week rise of approximately 5% in near futures prices. A forecast for mild weather to continue into early November, and higher wind availability, saw demand forecast below the seasonal norm for the next 2 weeks.  An improving supply outlook, with additional LNG shipments due to arrive at UK terminals over the next 3 weeks, pressured prompt and near futures prices.  Prompt gas contracts shed an average of 34.00p but remained just over 200.00p.

Falling gas and carbon prices saw GB power futures ease on Friday

Falling gas and carbon prices saw GB power futures ease on Friday with the heaviest loss recorded on the front month contract.  November shed £18.50/MWh while the remaining winter months were down by an average of £12.00/MWh, leaving all winter months marginally higher week-on-week.  A big decline in EU ETS unit prices helped lower power prices across the board on Friday. EU ETS unit prices fell by almost €3.00 per tonne, or 5% on Friday. This, combined with forecast below normal demand and higher wind availability for the next 2 weeks, saw prompt power prices tumble.  The day ahead baseload contract for today fell by almost £60.00/MWh.

Ongoing supply tightness is maintaining upward pressure on prices

The oil markets saw a second day of gains with Brent up 86 cents to $84.86 a barrel, having topped $85.00 intra-day.  Ongoing supply tightness is maintaining upward pressure on prices with Russian production currently at full capacity and OPEC still holding to gradual and modest increases in production quotas.  US production continues to increase as facilities in the Gulf of Mexico return following damage inflicted by the hurricane season.  New production rigs in operation in the U.S. has increased for a fifth consecutive week.  Demand continues to rise with economies reopening after lockdown, but projected demand is still below mid-year forecasts for Quarter 4.

The gas market is trading close to where it finished on Friday

The gas market is trading close to where it finished on Friday although prices are still subject to considerable volatility.  The front month November contract opened at 212.32p, 22.00p below Friday’s close but in the last hour so the market has firmed, and it is now priced at 234.50p, up by 1.14p.  December is the only other contract to trade thus far, and it has had a similar journey as the front month.  EUAs are under pressure this morning and the spot is down by 68 cents at €58.77 a tonne.  Forecast gas demand is coming in at 212 MCM and the UK system is delicately balanced at the moment.  Brent crude is priced at $85.62 a barrel, up by 76 cents.