Morning Market Update 17/08/2020
Gas and power prices pushed up last week as a result of strength in underlying commodities. UK gas and power are yet to start trading but power prices in Germany have opened a touch firmer. Power prices in France look firmer on the near curve.
- Well supplied gas system despite ongoing maintenance work
- Low wind generation for most of the week
- Carbon prices bounce back to €25.80/tCO2e
The UK gas system has opened over supplied by 13mcm today despite the planned maintenance work on fields that deliver into SEGAL pipeline. Theirs is still an ongoing outage at Asgard, however this hasn’t hindered UK gas flows. Norwegian flows are steady coming via Easington, Bacton and St Fergus Terminal. LNG send out from South Hook terminal has increased to 25mcm. We are expecting to receive one LNG cargo this week on Thursday from Qatar but we must receive four tankers the following week. The increase in LNG supply to the UK reduces gas supply concerns due to the planned maintenance work in August and September.
Temperatures are forecast to be above seasonal average this week which will increase power demand due to high demand for air conditioning. There is high CCGT generation today as wind generation is very poor with an output of 1.5GW. CCGT is generating 17.3GW of power which accounts for nearly 60% of the generation stack. Wind generation is forecast to be low for most of the week except on Thursday where it is expected to reach as high as 12GW. Biomass generation is decent with an output of 2.4GW. Nuclear output is mediocre with an output of 4GW today. We are currently importing at maximum capacity via the French and an additional 1.5GW via the Dutch and NEMO interconnector combined.
Oil prices have maintained previous gains and are trading at $45.02/bbl this morning. China plans to increase its imports of crude oil from US in August and September thereby showing positive signs of economic recovery. The OPEC+ meeting has been rescheduled for the 19th of August were members will discuss current production cuts. Carbon prices have bounced back to trading at €25.80/tCO2e after crashing towards the backend of last week. Strength in both oil and carbon is likely to keep gas and power prices supported this week. Coal prices have remained weak currently trading at $55.65/tonne.