The oil market remains bullish
15 June 2021
The UK gas market remained highly volatileEuropean gas prices moved higher on Monday as Norwegian deliveries fell off and LNG deliveries slowed. The UK gas market remained highly volatile as the week started on a bullish note with prompt gas prices stepping sharply higher. Demand on the UK gas system averaged just 110MCM on the day with an early supply deficit overturned as LNG send-out increased and the system finished 3MCM long. Early gains on the futures market were pared back slightly as the day progressed but near futures contracts still finished over 2.50p up on Friday’s closing levels as concerns rise over LNG diversion to Asian markets over the summer months.
GB baseload power futures kept pace with rising gas pricesGB baseload power futures kept pace with rising gas prices on Monday with the front month recording the biggest gain of £3.00/MWh. Summer prices were supported by increasing Asian demand for LNG which could see the UK gas system remain tight. Gains were also recorded further out with seasonal contracts up by an average £0.87/MWh. The day ahead baseload power price gained £2.00 on forecast lower wind availability for today. Wind generation is forecast to fall from over 5GW yesterday to just 1GW today, but solar generation is expected to remain strong.
Crude oil edged slightly higher with Brent gaining 17 cents for a second day running to settle at $72.86 having traded above $73.00 for much of the session. The market remains bullish as developed economies are showing increased appetite for oil products with increased economic activity. The U.S. benchmark, West Texas Intermediate, settled above $70.00 a barrel for a third consecutive day as the dollar weakened slightly. The International Energy Agency’s monthly report predicted oil demand returning to pre-pandemic levels by late next year, suggesting that OPEC production quotas will begin to ease in the coming months.
Crude oil edged slightly higher