Investors are betting US crude-oil inventories could see further declines in weekly data due on Wednesday
12 January 2021
The volatility on the UK gas market seen last week continued on MondayThe volatility on the UK gas market seen last week continued on Monday amid concern for LNG supplies for the remainder of the winter period. Severe weather conditions in Korea and Japan have led to increased demand and LNG prices which are attracting cargoes away from Europe. February LNG deliveries were closing on $20 per million BTU or £1.50 per therm. The front month gained over 5.00p for the second time in 3 days while March was up by 4.00p. Prompt products also saw gains of over 5.00p with the exception of within day, which recorded more modest gains on foot of a positive supply balance.
Gains on the power market generally lagged their counterparts on the UK gas marketThe front month GB power contract gained £4.05/MWh as gas prices stepped higher again on Monday. Seasonal contracts were up by less than £1.00/MWh, however. Gains on the power market generally lagged their counterparts on the UK gas market as carbon prices eased a little on the day. EU ETS unit prices were down by between 50 and 90 cent from Friday’s settlement levels. Supply margins improved as wind generation picked up to average 12GW but lower wind forecast for Tuesday saw the day ahead contract gain £30.00/MWh. Week ahead baseload power was up by £15.50/MWh as both day ahead and week ahead settled just under £100.00/MWh.
Crude oil prices saw mixed movement on Monday with Brent crude easing for the first time in a week while WTI gained marginally day-on-day. Brent crude settled 33 cents down at $55.66 while West Texas Intermediate gained 1 cent to settle at a new 10-month high of $52.25 a barrel. The market will be watching the next inventory report from the U.S. to determine if the previous week’s steep decline in stocks will be repeated or whether the dip was down to holiday driving demand. The market was reassured by OPEC’s responding to demand destruction by adjusting production levels. Investors also are betting US crude-oil inventories could see further declines in weekly data due on Wednesday.
Crude oil prices saw mixed movement on Monday