West Texas Intermediate at the highest level since October 2018

 Markets had opened firmer but early gains were relinquished later

The UK gas system was well balanced on Thursday with demand remaining steady at 150MCM.  Norwegian imports along with LNG made up almost 80% of yesterday’s supply as storage facilities continued to replenish reserves. The markets had opened firmer but early gains of around a penny were relinquished later as the carbon market also switched direction.  NBP futures settled mixed with the near months closing slightly higher while contracts further along the curve ran into negative territory.  Prompt contracts also reversed tack during the session and all products save for the spot closed with modest losses on the day.

 Baseload power futures settled mixed yesterday

Baseload power futures settled mixed yesterday as the market responded to movement in the gas and carbon markets.  Early gains were either pared back or fully reversed as the front month settled £0.50/MWh down at £73.25/MWh.  Carbon EUAs also fell through the afternoon session recording losses of around 2.5%. Baseload for the day ahead eased by £1.18/MWh despite a falloff in wind generation. While wind generation fell below 4.0GW yesterday and is not forecast to increase over the next week or so, solar photovoltaic is expected to average around 3.0GW.  

 The Energy Information Administration released what looked like a bullish report for crude oil

The Energy Information Administration released what looked like a bullish report for crude oil yesterday showing a fall of 5.1m barrels in U.S. crude oil stocks. On closer inspection, gasoline stocks increased by 1.5m barrels while distillate reserves grew by 3.7m barrels.  The market had only expected a fall of 2.4m barrels in crude oil reserves and prices picked up on the headlines with West Texas Intermediate peaking at the highest level since October 2018.  But prices fell back, with WTI moving from $69.40 a barrel to close at $68.81, down 2 cents day on day.  The global benchmark, Brent, hit a high of $71.99 a barrel before settling at $71.31, just 4 cents a barrel below Wednesday’s close.

 Crude oil prices have opened stronger this morning

Gas demand has fallen to 132MCM this morning and supplies are projected long by around 20MCM.  Initial trades on the NBP futures market were higher than yesterday’s close but latest exchanges on the front month and front season are down. July was last agreed at 62.20p per therm, down 0.48p while the winter contract has declined by 0.61p.  Crude oil prices have opened stronger this morning with Brent last trading at $71.73 a barrel, nearing a two-year high.  The U.S. is expected to release some economic data for May later today and the numbers returning to employment is expected to show a large increase.