Morning Market Update 19th March
Power and gas prices are a touch firmer this morning with tighter gas system and slight strength in oil. April gas has opened 0.45p/th higher and April power is 0.85p/MW up but little trading elsewhere on the curve.
- Wind generation drops under 2GW
- Gas system undersupplied
- Oil slightly firmer at $26.87/bbl
- Carbon continues softness at €16.4/tCO2e
Low wind and cooler temperatures have increased gas demand this morning to 8mcm above seasonal normal levels. LNG sendout is back to 71mcm as all sites are flowing in excess of 20mcm with 2 tankers docking yesterday. Langeled flows are back near capacity despite a reported outage at Gullfaks which is expected to last 3 days with a 14mcm impact. Withdrawals from Hornsea are currently at 9mcm with some small withdrawals nominated from a couple of other sites which may be sufficient to bring the system back to balance.
Wind generation has dropped this morning down to just 1.7GW causing CCGT to ramp up to 60% of the power stack at 22GW. We might see a slight pickup in wind later today but not enough to significantly decrease CCGT’s dominance. Nuclear remains at 4.5GW as it has all week but we may see one reactor return to service tomorrow to pick this up. We are again seeing 4GW through the interconnectors to the UK.
Last night’s crude oil inventories showed a smaller than expected build of 2 million barrels, against 3.5 million expected. Oil has bounced slightly to $26.87/bbl. Coal remains steady, failing to follow oil and carbon trends, currently trading at $55.4/t finding support at the $55/t level. Carbon is trading at €16.4/tCO2e having dropped to just €15.3/tCO2e yesterday. As the UK carbon auction failed to clear due to insufficient bids. These certificates will be pushed back to an auction later in the year.
The pound has come under pressure again today as the global market sell-off continues, however the majority of currencies are experiencing this pressure with the exception of the dollar which is showing strength as demand for it increases as the predominant currency global financial system is priced in. That being said the pound is still weakening at a faster rate than the Euro now trading at €1.056, the lowest rate since 2009.