Daily (03.10.2019): UK gas futures posted important losses on Wednesday amid strong pipeline and LNG supplies

03/10/2019 12:16 Daily

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Crude oil prices extended losses on Wednesday, after data showed a build in the U.S. crude inventories. Furthermore, pessimistic economic data in the U.S. dragged down the equities market, weighing on the global oil demand. Fading geopolitical tensions in the Middle East stoked oversupply fears, adding to the market bearishness. Against that background, Brent crude dropped by 2% to $57.69 a barrel, while WTI futures settled 1.8% lower at $52.64 a barrel.

Stronger pipeline supply from Norway put pressure on British forward gas prices on Wednesday. Moreover, expectations for robust LNG arrivals in Britain this month also contributed to the decline. As a result, the price for delivery in June 2020 sank by 3.4% to 42.01 p/therm. In the meantime, colder temperatures raised residential consumption, sending NBP spot 3.8% higher at 27.60 p/therm.

 

European spot electricity prices diverged on Wednesday. The German day-ahead power contract traded 1.9% down at 40.07 EUR/MWh, as anticipations of muted demand due to a bank holiday on Thursday outweighed the support from reduced wind generation and cooler weather. On the other side, the price for the equivalent French contract soared by 5.5% to 40.80 EUR/MWh, stimulated by increased demand driven by a sharp fall in temperatures.

 

Further on the curve, power prices continued to slide on Wednesday, tracking lower carbon prices and an overall weaker energy complex, as markets were pondering over further signs of slower global economic growth. The German power contract for delivery in 2020 lost 1.2% closing at 47.42 EUR/MWh. The equivalent French contract price fell by 1.1% to 50.25 EUR/MWh.

 

The EU carbon prices hit a fresh four-month low on Wednesday, amidst technical selling and bearish technical signals. The 2021-expiry contract tumbled by 3.3% to 24.80 EUR/tonne.

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