Seasonal U.K. power contracts pushed lower this week as irrefutable progress towards a coronavirus vaccine only briefly eclipsed the ongoing economic and health crisis. The record quarter-on-quarter GDP growth figure of 15.5% for Q3 still leaves the U.K. economy 10% smaller than it was before the pandemic, while unemployment rose to 4.8% through September.
An expanding LNG delivery schedule, strong Norwegian flows and forecasts of milder temperatures countered bullish, vaccine-related sentiment this week, sending U.K. gas contracts lower along the curve. The most notable declines were at the short-end of the curve with temperatures expected to stay above seasonal normal for the entirety of next week, which, alongside the arrival of a further four LNG cargoes, looks set to strengthen LNG storage stocks to levels not seen since last Autumn.
Oil benchmarks extended their recovery this week, with a substantial widening of time spreads indicative of the renewed confidence that a vaccine will deliver a boost to global oil demand next year. Brent topped $45/barrel for the first time in over two months, before pulling back on a surprise build in U.S. crude stockpiles; the Energy Information Administration reported a 4.3 million barrel increase in reserves.
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