OPEC announces a cautious approach to easing production restrictions
02 April 2021
Gas futures market gained support from rising oil pricesThe gas futures market gained support from rising oil prices on the day as OPEC announced a cautious approach to easing production restrictions as major economies recover from Covid restrictions. The strengthening gas market movement of the previous 2 days seemed to be losing momentum on Thursday however as near futures contracts recorded only marginal gains yesterday. With the UK gas system running short throughout the day, spot and day ahead prices gained strongly as demand is forecast to increase with lower temperatures and falling wind availability for Friday.
GB power futures recorded more modest gainsGB power futures recorded more modest gains on Thursday in line with marginal movement in gas and carbon prices on the day. Following record deliveries of LNG in March, supply is forecast lower for April, but this did not adversely impact the front month price. EU ETS unit prices eased slightly, finishing in a range between €42.37 and €43.31 per tonne. The day ahead baseload contract for Tuesday gained £2.00/MWh as temperatures were forecast to plummet. Wind generation was forecast lower up to Sunday but is expected to pick up strongly next week, helping to offset increased heating demand.
Crude oil prices rebounded on Thursday, recovering the losses of the previous 2 days. Brent crude gained $1.32 to close at $64.86 while West Texas was up by $2.30 a barrel to settle at $61.45. The increase came as OPEC decided to cautiously increase output as vaccination programmes allow restrictions to be eased. Such a strategy will require close monitoring of economic recovery in major oil consuming nations, many of which are experiencing a surge in Covid cases and implementing tighter lockdown measures. Carbon emission prices eased slightly on the day but remain close to record highs.
Crude oil prices rebounded on Thursday recovering the losses of the previous 2 days