Weekly EIA report showed US oil inventories fell last week
11 February 2021
Demand climbed to a new winter-to-date high of 412MCMAs demand climbed to a new winter-to-date high of 412MCM, deliveries remained ahead of demand throughout the trading day and prompt gas prices fell as a result. The day ahead contract shed 2.45p while the balance of month contract was down by 3.05p as milder weather is forecast for the second half of the month. A second day of losses on the UK gas market more than reversed Monday’s surge higher as the market looked beyond the current high demand situation with more confidence in supply-side resilience. The front month shed 1.82p to settle below last Friday’s closing level.
Baseload futures power contracts were inclined to move lower across the board but another hike in carbon prices saw contracts further out the move slightly higher. The front month shed £1.17 but contracts beyond Q2 gained marginally as carbon prices gained over €1.00 per tonne to settle in a range between $39.30 and $39.90 per tonne. Day ahead power fell by £8.00/MWh to settle at £71.72/MWh despite falling wind availability. Wind power contributed less than 5GW on Wednesday and is forecast to remain subdued today while demand is forecast to remain elevated with temperatures remaining below freezing in many parts of the UK.
Carbon prices gained over €1.00 per tonne
Crude oil prices continued to strengthen on Wednesday with help from falling U.S. inventory levels and a further weakening of the dollar versus other major currencies. Brent crude was up by 38 cents to $61.47, while West Texas gained 50 cents to settle at a 13-month high of $58.68 a barrel. Today’s price-rise was supported by a weekly EIA report that showed US oil inventories fell last week by a hefty 6.6M barrels, putting total US stockpiles at 469M barrels, just 2% above the five-year average. That number indicates that global supplies are tightening as the US and Russia, as well as Saudi Arabia and other OPEC members hold back production in an effort to rebalance the market.
Crude oil prices continued to strengthen on Wednesday