Crude oil prices have eased a little further overnight

Futures prices gained marginally on the day

The UK gas system opened 9MCM short yesterday and remained 2MCM short at close of business. The persistent supply deficit did not prevent further losses on the prompt gas market on Wednesday. Despite demand falling to normal levels for this time of year, the supply side was short by an average of 5MCM throughout the trading day. Prices for the remainder of this week and the weekend fell by between 0.60p and 1.60p. The February contract, which expires tomorrow eased fractionally but remaining futures prices gained marginally on the day, with the March contract posting the biggest gain of 0.42p.  

Day ahead baseload power slipped marginally lower on the day

Despite rising gas prices and near record high carbon prices, GB power futures eased again on Wednesday. The front month shed £0.57 to settle at £63.80 and is down £3.10/MWh week-on-week. EU ETS unit prices saw mixed movement on the day but remained close to record highs of between €33.28 and €33.84 per tonne. Day ahead baseload power slipped marginally lower on the day as demand eased for a second day running. Despite a further decline in wind generation, supply margins improved yesterday and were forecast to remain positive for the remainder of the week.  

Brent crude eased by 10 cents to settle at $55.81 a barrel

The oil market remained rangebound as it has been since the first week of January. Brent crude eased by 10 cents to settle at $55.81 a barrel, while West Texas Intermediate gained 24 cents to $52.85 a barrel. The slight uptick on the U.S. benchmark was a result of a decline of 10 million barrels in U.S. crude stocks revealed in Wednesday’s weekly inventory data release. Such a decline in crude stocks would normally see a more bullish response from the market but evidence of a decline in gasoline demand last week countered any bullish momentum on the market yesterday.

 

Demand on the UK gas system has fallen below 300MCM for the first time this month

Demand on the UK gas system has fallen below 300MCM for the first time this month as temperatures rise above the seasonal norm and wind generation picks up. The system is currently forecast 14MCM long for today and while no trades have yet been recorded on within day and day ahead contracts, the bid-offer spreads suggest some hefty increases to come. The February contract, which expires today, has gained 2.50p on last night’s closing price and the Summer 21 contract is up 0.88p. Crude oil prices have eased a little further overnight with Brent currently trading at $55.55 a barrel.