Volatility continued on the power prompt where the day ahead price jumped.

Weaker dollar makes oil more attractive in other currencies

Crude oil markets extended gains for the second session a row on a combination of a weaker dollar and some more optimism on future oil demand. With crude oil being priced in dollars, dollar weakness makes oil more attractive in other currencies, which in turn acts to boost prices.  The latest monthly report from OPEC suggests an increase in 2021 global demand albeit by a small amount.  Both factors encouraged Brent crude to trade to a high of $64.19 a barrel at one stage but by market settlement the product had moved off its high point for the day to $63.67, posting a gain of 39 cents.  

High- pressure system over UK will result in lower wind generation

GB baseload power futures recorded modest losses on Tuesday with the market giving up some of the gains from the previous session.  The weakening of the power curve can be attributed to losses in both the NBP gas and EUA carbon markets.  The June baseload power contract settled at £58.28/MWh, £0.62 lower than the previous day. Volatility continued on the power prompt where the day ahead price jumped by a further £13.20/MWh. A high-pressure system is expected to lodge itself over the UK in the coming days and this will almost certainly result in lower wind generation levels putting more pressure on the power system margin.    

Forecast demand fell slightly with strong supplies from Langeled pipeline and LNG sources.

UK NBP gas markets moved between gains and losses as volatility remained a factor during the session.  Gas contracts were weaker on opening and the market seemed set fair to give up some of the gains from the previous session.  Gas fundamentals improved from the previous session and the system operated with the small surplus throughout the day.  Forecast demand fell slightly to 285MCM with strong supplies from the Langeled pipeline and LNG sources.  Prices reversed track in the middle of the session with gains of 0.50 to 0.75p creeping into the market.  These were short lived and despite the wide differential the market finished lower at settlement.

The system is finely balanced this morning with demand and supplies exactly matching.

Demand on the UK gas system remains on par with yesterday’s level.  The system is finely balanced at the moment with demand and supplies exactly matching.  Distribution/heating demand remains high with temperatures remaining below the seasonal norm.  Supplies via the Langeled pipeline have stepped back a little but this is being offset by increases in LNG send out.  On the market prices have opened a touch higher with much of the early movement focused on the prompt and front of the curve.  The front month June contract has added 0.47p as it trades at 49.07p per therm.  Crude oil markets have firmed further overnight with Brent quoted at $64.69 a barrel.