Crude oil prices edged higher for a fifth consecutive session

 The UK gas system ran short throughout the day

An unplanned outage on the Karsto field and ongoing planned maintenance on the Norwegian gas system saw Langeled deliveries fall below 20MCM yesterday. The UK gas system ran short throughout the day as a result but despite the supply deficit, prompt gas prices fell by an average of just over 1.50p. With the NBP spot price offering a premium today ahead for most of the trading session, storage withdrawals ramped up to help balance the system at close of business. Near futures contracts shed over 0.50p as the supply outlook for the remainder of the summer months improves with stronger Norwegian supply post-maintenance.  

GB baseload power futures eased in line with falling gas

GB baseload power futures eased in line with falling gas and carbon prices for second consecutive day on Wednesday. Losses were slight by comparison to Tuesday with the front month down by £0.27/MWh and Winter 21 falling by just £0.10/MWh. EUA’s fell by an average of just 5 cent per tonne. The day ahead baseload power price gained £4.50/MWh as both wind and solar generation levels were forecast lower for today. The day ahead baseload contract settled above £80.00/MWh for the first time in over a month.

Brent crude gained 40 cents

Crude oil prices edged higher for a fifth consecutive session on Wednesday. The weekly inventory data from the U.S. showed crude stocks falling by 7 million barrels but gasoline stocks rose for a third week running, tempering any bullishness in the market. Brent crude gained 40 cents to finish at $74.39, its highest settlement level since April 2019. West Texas Intermediate recorded a similar gain to settle at $72.14 a barrel. Market optimism for demand increase is growing with the roll-out of vaccines and lifting of restrictions in Europe and the U.S. but there is also concern over possible production increases if OPEC increases quotas or Iranian sanctions are lifted.  

The day ahead contract has recovered some of yesterday’s loss

With renewable generation supplying just 2.5GW of GB power this morning, demand on the gas system has risen to 140MCM. The system is well-supplied however with Langeled flows increasing to 50MCM and LNG send-out from Milford Haven at 40MCM. The day ahead contract has recovered some of yesterday’s loss and is up 0.65p at 68.95p. Prices for the remaining summer months continue to ease with the July contract down by 0.25p. Dutch and Belgian prices for the summer months are trading at a premium to the NBP and proving more attractive for LNG shippers at present. Brent crude has shed 25 cents to currently trade at $74.14 while EUA’s are down 45 cent overnight.