The latest stimulus package for the U.S. economy has yet to produce any significant increase in oil demand
02 February 2021
UK gas market experienced a sharp downward correction on the first trading day of the new monthDespite above normal demand yesterday, the UK gas market experienced a sharp downward correction on the first trading day of the new month. Despite high demand levels and forecasts for further cold weather, a greater level of confidence regarding supply for the remaining winter period emerged. With demand rising to over 360MCM on the day, deliveries more than matched and the system finished in surplus. Prompt gas prices fell by 5.80p and the March contract was down by 4.91p. Losses stretched right along the curve with over a penny coming off all contracts for the coming 12 months.
The sharp downward correction on the UK gas market saw GB power prices move lower on Monday with the new front month contract for March shedding £4.35/MWh. Losses on futures contracts for Summer 21 and beyond saw prices back to levels prevailing at the turn of the year. Carbon prices were little changed day-on-day. Day ahead baseload power reversed Friday’s step higher despite low wind availability and increased demand. Gas-fired generation was called on to meet over 50% of demand yesterday as wind generation dropped to below 4GW.
Gas-fired generation was called on to meet over 50% of demand yesterday
Crude oil prices gained on Monday with Brent crude up 47 cents to settle above $56.00 for the first time in 2 weeks. The U.S. benchmark WTI gained 54 cents to settle at $54.74 a barrel. A fresh commitment by Saudi Arabia to maintain production cuts helped boost the market on the day. While there is plenty of bullish appetite on the markets, the upside for oil has been limited by the ongoing economic stasis due to coronavirus lockdowns and particularly the depression in aviation demand. The latest stimulus package for the U.S. economy has yet to produce any significant increase in demand in the biggest oil consuming economy.
The U.S. benchmark WTI gained 54 cents to settle at $54.74 a barrel