Crude oil contracts have recovered some of yesterday’s losses

Prices have been elevated and increasing for the last number of sessions

The UK NBP market opening considerably lower on Thursday with gas prices trading between 2.00p and 3.00p lower than the previous night’s close.  Prices have been elevated and increasing for the last number of session and Thursday’s softer market was a welcome development although contracts did firm towards the close.  There is no doubt that a general improvement in temperature plus the lower crude oil price were the key drivers on the day.  In fact, forecast gas demand was coming in at just 202MCM and the system remained in balance throughout the day although prompt prices pushed higher nonetheless which prevented the forward curve from posting significant losses at the close.

EUA carbon prices moved lower for the first time in more than 6 sessions

EUA carbon prices moved lower for the first time in more than 6 sessions and all contracts moved off the record highs set in the previous session.  It is likely that the market is responding to the lower crude oil price and the impending first auction of the new UK ETS next week.  The lower carbon cost combined with less expensive gas and crude oil to drive a modest amount of premium from longer term baseload contracts.  At the front of the power curve contracts remain elevated and with the prompt firming by £1.00 to £84.90/MWh, more price pressure was added to near term contracts.  

Following multi-sessions of gains the Brent crude contract gave up premium over the course of the day

The Colonial pipeline in the U.S. came back into action after a six-day shut down following a recent cyber-attack.  While widespread gasoline shortages remain, the crude oil market welcomed the return of this key piece of infrastructure by marking crude oil prices lower yesterday.  Following multi-sessions of gains the Brent crude contract gave up premium over the course of the day and by settlement Brent was priced at $67.05 a barrel, down by $2.27 from the previous close.  While the full impact of the impact of the shutdown has yet to be addressed. U.S. officials have indicated that gasoline supplies will return to normal in a matter of days.  

The gas futures market has opened firmer and the modest losses from yesterday

Demand on the UK gas system is unchanged from yesterday’s level of 202MCM and remains in line with the seasonal norm.  The gas system is forecast to run with a surplus of 8MCM for today.  The gas futures market has opened firmer and the modest losses from yesterday have been reversed with further premium added.  The front month June contract is trading at 68.35p per therm, up by 1.43p from last night’s close.  Other contracts along the curve have added similar amounts.  On the gas prompt, both the spot and day ahead contracts have added 0.50p to trade at 69.25p and 69.35p respectively.  Crude oil contracts have recovered some of yesterday’s losses with Brent trading at $67.65, up by 60 cents.