Crude oil prices eased as backlog in Suez Canal started to clear

31 March 2021

 Prompt and near future gas prices settled higher

Gas prices at the NBP rebounded after Mondays’ losses with both the prompt and near futures settling higher. Forecasts for cooler temperatures from the weekend gave support to the weekend and week ahead products which closed 2.00p higher while movement for the spot and day ahead contracts was marginal on the day. The gains in prompt fed into the near curve with April and the summer contracts, both which expired on ICE yesterday, adding over a penny. In the crude oil markets, both Brent and West Texas settled lower after the backlog in the Suez Canal started to clear.  

Baseload curve supported by higher gas and carbon EUAs yesterday

  Higher gas and carbon EUAs supported the baseload curve yesterday as contracts settled an average of £0.50/MWh higher. Carbon EUAs closed 20 cent per tonne up on Tuesday with the spot contract settling at €41.95 per tonne. Wind generation is expected to decline over the week although it is now forecast to be little higher than in earlier forecasts.  

 Stronger dollar weighed on crude oil process yesterday

  As the backlog in the Suez Canal started to clear yesterday the premium added to crude oil prices over the last few days started to unwind yesterday as Brent settled 84 cents a barrel down. The backlog of over 400 ships could be cleared within four days according to the Canal operator after the Ever Given vessel was refloated on Monday. A stronger dollar also weighed on crude oil prices yesterday and the markets are expecting a strong build in U.S. crude oil stocks to be confirmed by the Energy Information Administration later today. OPEC are due to meet on Thursday and the group are expected to maintain current levels of output after recent curbs in demand.  

On the curve early activity focused on the new front month

  Trading has yet to open for prompt products on the NBP and this is possible due to the very wide bid/ offer spreads on the spot. These are suggesting prices will open firmer although no trades have been agreed thus far. The gas system is forecast to run long by 21MCM against a demand for today of just 217MCM. On the curve early activity has been focused on the new front month, May, which has traded up to 47.69p early on and last traded at 47.30p, up 1.36p on yesterdays close. Crude oil prices also opened stronger but in the last hour those early gains have been reversed with Brent last trading at $64.04 a barrel, down 10 cents.