Gas prices climbed higher towards the end of Friday’s session as traders cashed in on their short positions in anticipation of a rebound in oil prices. However, a drop in coal limited the gains on the gas curve. In terms of supply, the system was balanced throughout the session as exports and demand levels increased.
Oil continued to act as the main market driver yesterday, following significant losses in the previous session which helped to weigh on contracts across the gas curve. Coal prices also inched down, while fundamentals were largely unchanged as the system remained long despite high exports and reduced flows from Norway.
Yesterday’s session was quite turbulent with early morning losses, a rebound in the afternoon and a sharp drop before the end of trading. The main driver of gas prices was the oil market, with news that Libya are set to ramp up production levels, resulting in the largest decrease in prices for two years.
Gas prices were pushed higher by rising coal and oil markets in the morning but eased in the afternoon. Brent moved down towards the end of the session, weighing on the far-curve, while prices at the front of the curve were pressured down by an oversupplied system following a slight drop in CCGT demand.
Increases across coal, carbon and oil markets helped to lift gas contracts yesterday afternoon, with Brent in particular rising by over $1/b due to supply issues. The Pound also weakened against the Euro, providing additional bullish pressure, while the supply/ demand picture was almost unchanged from last week.