Prompt prices closed with modest losses on the day

Tuesday saw a second sharp correction in crude oil prices within a week as Brent shed $3.83 a barrel to close at $60.79. A week ago, the global benchmark was $68.00 a barrel and has shed $7.60 since as concerns of oversupply increase while more European states increase restrictions. Gas prices in the UK opened softer yesterday but the early declines on the near curve were reversed through the afternoon session. Prompt prices recovered over the session too but closed with modest losses on the day despite a healthy supply outlook with LNG supplies being topped up.

UK gas markets opened softer with losses on near futures of up to a penny

The UK gas markets opened softer on Tuesday with losses on near futures of up to a penny, however, contracts at the front of the curve reversed tack in the afternoon and ended the session higher. The early declines in prompt prices were also partially reversed in the afternoon leaving most contracts to close with modest losses. The gas system was comfortable yesterday with a good outlook for the remainder of the month supply wise. LNG supplies were topped up yesterday after two cargoes were unloaded with more deliveries expected before Easter. Norwegian flows recovered to almost 80MCM and increased wind generation in the coming days is expected to displace gas generators from the power stack.

 Brent dipped to a low of $60.27 a barrel on Tuesday

Brent dipped to a low of $60.27 a barrel on Tuesday before closing at $60.79, down $3.83 a barrel. It was the second sharp correction within a week for the global benchmark and lowest closing price since early February. The market moved into a contango briefly yesterday, this is where the front month is at a discount to futures contracts and could encourage traders to hold and store supplies in order to avail of higher prices. The slowed rollout of vaccines in Europe coupled with increased lockdowns has added to oversupply concerns while a stronger dollar also weighed on prices yesterday. West Texas Intermediate settled at $57.76 a barrel down $3.80.  

Reports of a large container blocking the Suez Canal as oil and gas markets opened firmer

  The oil and gas markets have opened firmer this morning, but fundamentals remain the same apart from reports of a large container ship blocking the Suez Canal. It is uncertain as to how long the blockage will take to clear so the markets have reacted as the waterway is a key link between the East and West. Brent is trading $1.93 a barrel higher having shed $3.83 a barrel on Tuesday. NBP futures are trading almost a penny higher for the most part while on the prompt the spot and day ahead have added 2.10p. UK supplies are forecast to run 23MCM long against a demand of 245MCM for today. LNG supplies have dropped to 85MCM while imports from Norway are nominated at 77MCM for today.