Crude oil has relinquished half of yesterday’s gains

Monday saw the first significant shift in the front month gas price in over a year

Monday saw the first really significant shift in the front month gas price in over a year. An early supply deficit on the UK gas system sent prompt prices higher and the front month responded accordingly. Prompt prices gained an average of 2.65p with the strongest shift coming on the balance-of-month contract which was up by 3.00p. The September contract gained 2.55p to settle at 18.19p and the Q4 contract was up by 1.05p. Movement on contracts further out the curve was less significant but the front winter gained 0.83p none-the-less. The system deficit was only corrected in the last hour of trading as Langeled deliveries and storage withdrawals both rose to over 20MCM.

Near futures power contracts were pushed higher by strong gains on the gas market

Near futures power contracts were pushed higher by strong gains on the gas market but falling carbon prices tempered the gains some-what. The new front month contract for September gained £1.80/MWh to settle at £35.50/MWh while the front winter contract was up by £0.50/MWh. Emissions prices eased marginally on the day. Day ahead baseload contract fell by 10% on Monday, bucking the trend on the wider energy markets. The contract shed £3.60/MWh to settle at £30.50/MWh as an unexpected rise in wind availability was forecast for today.  

Crude oil prices rose on Monday with support from general improvement on the commodities and equities markets

Crude oil prices rose on Monday with support from general improvement on the commodities and equities markets. The new front month contract for Brent crude for October gained 85 cents to settle at $44.15 a barrel. The U.S. benchmark WTI contract for September was up by almost a dollar to $41.00 a barrel. The market is betting on accelerating demand recovery with strong manufacturing data issuing from China and Europe for July. the number of new coronavirus cases in the U.S. was the lowest in a month on Sunday. However, with surges in new cases in many other countries, the pandemic will continue to play on the markets for some time to come.  

UK gas system is over-supplied this morning with forecast deliveries outstripping forecast demand by 25MCM

In contrast to yesterday’s opening, the UK gas system is over-supplied this morning with forecast deliveries outstripping forecast demand by 25MCM. Demand has fallen to just 125MCM due to an unexpected increase in wind availability which has taken out a large tranche of gas-fired power generation. On the prompt gas market, the spot price has eased by 0.45p but day ahead gas has yet to trade this morning. Front month and Winter 20 contract prices have gained by 0.71p and 0.57p. Crude oil has relinquished half of yesterday’s gains in overnight trading on Asian markets as traders await inventory data from the U.S. to see if last week’s bullish stock decline is repeated.