Daily (17.10.2019): NBP spot slumped by over 8% on Wednesday amid firmer Norwegian exports and lower gas-for-power demand

17/10/2019 11:38 Daily

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Speculations about a potential extension of crude supply cuts by OPEC and its allies as of December led to a recovery in crude oil prices on Wednesday. The greenback’s slide coupled with short covering in anticipation of an industry report on U.S. crude inventories also contributed to the market rally. Still, concerns over tighter crude demand and expectations for higher crude stocks in the U.S. limited gains. Against that backdrop, Brent crude rose by 1.2% to 59.42 USD/bbl, while WTI futures advanced by 1% to 53.36 USD/bbl. 

A rise in the overall Norwegian pipeline flows to Europe weighed on British gas prices on Wednesday. Lower demand from gas-fired power plants caused by strong wind generation added to the market bearishness. As a result, NBP spot plunged by 8.1% to 26.20 p/therm. Further on the curve, the Q2 2020 delivery contract retreated by 1.2% to 43.03 p/therm, due to steady LNG arrivals. 

 

European day-ahead electricity prices posted strong gains on Wednesday on forecasts for a decline in wind power output. The German spot power price soared by 10.9% to 43.77 EUR/MWh amid rising consumption. The equivalent French contract traded 7% higher at 44.08 EUR/MWh, in the context of reduced nuclear supply and a strike action.

 

Forward electricity prices were also bullish on Wednesday, tracking the continued surge in the carbon market and firmer oil futures. The 2020-delivery German power contract added another 1.3% to close at 49.04 EUR/MWh. The price for the equivalent French contract inched up by 1% to 51.83 EUR/MWh.

 

The European carbon prices extended their upward evolution on Wednesday, stimulated by the rally in the British pound on strong hopes for a much-awaited end of Brexit tensions. The contract expiring in 2021 gained 2.3%, reaching 26.86 EUR/tonne.

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