Crude oil markets remain on edge as cases of Covid 19 increase across the globe

The UK NBP market has now gained for multiple sessions in a row

UK gas futures maintained their elevated position on Thursday and further risk premium was added to contracts during the session.  The UK NBP market has now gained for multiple sessions in a row as pressure is maintained on contracts.  For the most part contract moved of their intra-day highs as prices eased towards the close.  The front month May contract traded to a high of 54.75p before closing at 53.86p, up by 1.04p from the previous session.  Other contract across the curve added 0.83p on average in a well traded session.  On the supply side forecast demand was coming in at 230MCM, which is normal for this time of year, and the system ran with a surplus of 11MCM.

 EU ETS unit prices gained further during Thursday’s session and new record highs were set

Following the EU agreement on higher emissions reduction targets for 2030, EU ETS unit prices gained further during Thursday’s session and new record highs of between €48.12 and €47.09 per tonne were set.  There is no doubt that the market is also being driven by compliance buying with the surrender date coming at the end of April. Gains on the forward can be largely attributed to the surging carbon price with higher gas input costs playing a role.  The front month May baseload power contract added £1.35 to close at £63.85/MWh.  Winter 2021 baseload pushed up to £73.10/MWh adding £0.90 in the process.  

 Crude oil markets broke a two-session losing streak on Thursday

Crude oil markets broke a two-session losing streak on Thursday as the market remains on edge as cases of Covid 19 increase across the globe.  Prices moved in both directions over the course of the session as market participants try to gauge the impact of more rolling shutdowns in various large oil consuming countries.  Coronavirus cases are surging in both India and Japan which rank as the world’s third and fourth largest consumers of oil.  Adding to these bearish signals was with the recent rises in U.S. oil inventories.   At settlement the market finished slightly up. Brent crude settled at $65.40 a barrel, up by just $0.08 from the previous session.  

The gas market has reversed track overnight and following multiple sessions of gains

The gas market has reversed track overnight and following multiple sessions of gains, gas prices are in decline.  At this early stage the front month contract has traded at 52.21p, 1.65p below where it settled last night.  Likewise, the front Winter is trading down by 1.59p at 59.25p per therm.  With temperatures rising across the UK and Ireland forecast gas demand has declined to 203MCM, some 27MCM lower that yesterday.  The system is carrying a healthy surplus of 32MCM this morning.  Activity on carbon markets is beginning to subside and prices are in retreat.  EUA contracts are down by between 40 to 42 cents.  Crude oil market remains stable with contract trading at last night’s closing point.