Crude oil prices moved through the $75 a barrel mark on Wednesday
24 June 2021
UK gas prices moved higher once againFollowing a muted opening, UK gas prices moved higher once again in tandem with higher crude oil and carbon prices. There is no doubt that the higher crude oil price in now combining with the strong Asian LNG demand and low gas storage stocks to provide significant support to UK and wider European gas markets. Gas premium grew steadily over the course of the day with the front month adding 1.95p as this contract closed at 76.90p per therm. Across the remainder of the curve price increases averaged 2.00p on average. On the supply side gas flows from Norway continue to be restricted as the Skarv field joins Karsto for unplanned maintenance.
Baseload power futures in the UK continued on an upward trajectoryBaseload power futures in the UK continued on an upward trajectory as the NBP curve firmed further and EUA contracts added more premium. The front month closed at £81.25/MWh up £2.25/MWh while the front Winter contract moved higher by £1.75 to close at £89.53/MWh. The power market is expected to remain elevated given the perceived tightness with gas supplies. Forecasts for higher wind generation for today and into the weekend caused the power prompt to ease. Wind generation peaked at 4GW on Wednesday and is expected to maintain this level in coming days. The day ahead contract for closed at £87.80/MW, £2.25/MWh lower.
Crude oil prices moved through the $75 a barrel mark during trading on Wednesday and even threatened to go beyond the $76 point as the market reached a two year high. The latest U.S. inventory reports were due on the day and the expectation was that there would be a significant draw on supplies. Stronger demand in the key U.S. market which accounts for more than 20% of global demand is expected to continue to keep prices supported in the short term. Given this increase in demand it will be interesting to see what OPEC does and whether it moves with its allies to release more production on the market.
Crude oil prices threatened to go beyond the $76 point