Daily (29.05.2020): UK gas prices plunged to historical lows due to oversupply and weak demand

29/05/2020 10:37 Daily

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Crude oil futures turned higher on Thursday, shrugging off an unexpected rise in U.S. crude stockpiles as traders focused on falling gasoline stocks and a further decline in crude stored at the New York Mercantile Exchange’s delivery hub in Cushing, Oklahoma. Moreover, expectations for further oil outputs cuts by Russia starting from July added to the upbeat sentiment. 

Hence, Brent crude for July delivery rose by 55 cents, or 1.6%, to settle at $35.29 a barrel, while U.S. WTI crude increased by 90 cents, or 2.7%, to settle at $33.71 per barrel.

 

The British day-ahead gas price declined considerably on Thursday, with NBP spot 8.2% lower at 8.40 p/therm due to warmer–than-normal weather and sluggish demand. However, weaker LNG arrivals to the UK will help remove some pressure on the system. On the curve, the gas price for year-ahead delivery decreased by 1.7% to 32.09 p/therm, tracking a bearish energy complex. 

European spot power prices evolved differently on Thursday, with the German day-ahead price 11.2% higher at 22.69 EUR/MWh amid tumbling wind energy generation in Germany and higher exports. Nevertheless, the equivalent power contract in France dropped by 2.4% to 16.81 EUR/MWh due to a weaker demand. 


Year-ahead power contracts lost ground, tracking weaker gas, carbon and coal prices. As a result, the German Cal’21 power was 1.5% lower at 37.11 EUR/MWh, while the French Cal’21 contract shed by 1.6% to stand at 45.50 EUR/MWh.

 

European carbon prices posted minor losses, but traded above €21 on Thursday, pressured by bearish technical signals. Consequently, EUAs expiring in 2021 slipped by 0.4% to 21.62 EUR/MWh.

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