Prospect of the lifting of sanctions on Iran still hangs over the oil market
03 June 2021
UK storage injection stepped up significantly on WednesdayUK storage injection stepped up significantly on Wednesday, with demand otherwise weakening. Overall demand remained well below the seasonal norm yesterday despite the increase in storage injection rates during the day. Warm weather and moderately strong wind generation kept overalll demand below 150MCM for most of the day and the system remained in surplus throughout. The spot gas price eased slightly but remaining prompt contracts gained by up to a penny. Near futures prices fell by over a penny, maintaining a negative price differential over the past 5 days.
Carbon prices relinquished half of Tuesday’s gainsBaseload power futures largely reversed gains recorded on Tuesday as gas and carbon prices eased on Wednesday. Prices for Q3 were down by £1.20 while the front winter shed £1.50/MWh on the day. Carbon prices relinquished half of Tuesday’s gains to settle in a range between €51.36 and €52.83 per tonne. The day ahead contract gained £4.00/MWh as wind generation levels are forecast to fall lower today. Wind exceeded expectations on Wednesday, delivering up to 7GW during the trading day but is forecast to deliver only half that amount today.
Crude oil prices strengthened further on Wednesday as OPEC announced there would be no change in production quotas this month and the Iran – U.S. talks stalled. Brent crude pulled away from the $70.00 mark, gaining $1.10 to settle at $71.35 a barrel. West Texas Intermediate recorded a similar gain to settle at $68.83 in the absence of any major news on U.S. supply and demand as the weekly inventory data was delayed due to Monday’s holiday. The prospect of the lifting of sanctions on Iran still hangs over the market and could knock prices back below $70.00 if significant amounts of Iranian crude come back onto the market.
Brent crude pulled away from the $70.00 mark