The see saw nature of global crude oil markets evident again
26 March 2021
Suez Canal blockage remains, causing markets to struggle with the implicationThe volatile nature of crude oil markets continued yesterday with oil contracts coming under pressure from the outset. In the last three session oil prices have been down, up, and down by more 5% on each occasion. Despite previous reports that progress had been made, the blockage in the Suez Canal remains and markets seem to be struggling with the implication for energy prices. The gas market was in benign mood yesterday with Summer 2021 down by 0.51p while Winter 2021 settled at 53.95p, down by 1.06p. EUA carbon contracts also eased by €1.23 per tonne.
UK gas system operated with a strong surplus as demand droppedThe UK gas system operated with a strong surplus on Thursday as demand in the distribution and gas fired generation dropped. With wind generation forecast at 12GW there was little requirement for conventional gas generation. With a surplus of 34MCM present on the system, prompt gas prices came under pressure from the outset. Both the spot and day ahead contract gave up XX and aa prospectively. The blockage in the Suez Canal was expected to drive some premium into the curve but the reverse was the case as news emerged that the impact on LNG tanker traffic had been minimal. At market settlement the NBP was trading lower overall with average losses at 0.70p per therm.
The see saw nature of global crude oil markets was evident again on Thursday as prices turned lower once again in another volatile trading session. The worries about a supply squeeze as a large container ship continues to block the Suez Canal seem to have dissipated. While salvage efforts are still ongoing and the build up of LNG, Oil and other cargo vessels remain. The market seems to believe that this issue will be resolved in short order despite little firm news to suggest this. In any event the crude oil market gave up a considerable amount of premium that was added in the previous session with Brent declined by $2.46 to close at $61.95 a barrel.
Build up of LNG and oil cargo vessels remain