Crude oil prices eased on Wednesday
14 January 2021
4-day rally culminated in a day-on-day surge in the front month price of 16%Following 4 days of strong gains, the UK gas market adjusted lower on Wednesday. The previous 4-day rally culminated in a day-on-day surge in the front month price of 16% and a week-on-week increase of 42% on Tuesday, the market was primed for adjustment. That adjustment was sharp as the front month contract more than reversed Tuesday’s surge, shedding 12.27p to settle at 65.16p, but was still up by 20% week-on-week. Movement beyond the current winter months was less dramatic with Summer and Winter 21 contracts up by less than 2.5p week-on-week.
The February and March GB power contracts fell by £10.00/MWh in response to the reversal on the UK gas market on Wednesday. The system margin was also improved on the day, helping to ease the market. Carbon prices also fell back on the day, but front month baseload power remained elevated at £75.00/MWh. The day ahead baseload price fell back from Tuesday’s spike of £136/MWh but remained elevated at £112/MWh. The system margin is forecast slightly stronger for today and wind generation levels are forecast to pick up to around 8GW.
Carbon prices fell back on the day
Crude oil prices eased on Wednesday but retained most of the premium gained in the rally of the previous week. Brent crude shed 72 cents to settle at $56.06 a barrel while West Texas Intermediate was down 30 cents to $52.91. The fall in WTI was the first in 7 days and came on the back of bearish inventory report from the States yesterday which showed a large increase in gasoline and distillate stocks in the first week of the New Year. The data suggests demand in the U.S. remains heavily depressed and while OPEC may be committed to preventing any collapse in prices, near-term demand issues will continue to limit further upside in oil prices.
The fall in WTI was the first in 7 days