Crude oil gained another dollar to settle at a 30-month high
06 July 2021
Ongoing concerns for gas supply extended to the front winter monthsThe ongoing concerns for gas supply extended to the front winter months as storage levels in the UK and Western Europe are at multi-year lows. Friday’s modest losses on the UK gas futures market proved exceptional as the seemingly relentless upward trend resumed with serious impetus on Monday as contracts for the next 9 months gaining over 4.00p on average with mid-winter contracts settling above 100.00p. Demand on the UK gas system was forecast at just 125MCM yesterday morning and forecast deliveries were running 25MCM long but while storage injection demand did pick up over the course of the day, the system still finished long. Within day and day ahead prices eased marginally.
GB baseload power futures moved higher on MondayGB baseload power futures moved higher on Monday, supported by fuel and emissions price increases on the day. Prices for the coming 9 months recorded increased averaging £2.44/MWh with mid-winter 2021-2022 months settling above £100.00/MWh for the first time. The day ahead contract shed £1.75/MWh on forecast better wind availability for today. Wind generation is forecast to rise to 6GW, up from less than 3GW yesterday. EUA’s gained 40 cents to reach new highs yesterday while UKA’s recorded more modest gains of 10 pence/tonne.
Crude oil gained another dollar to settle at a 30-month high of $77.16 a barrel yesterday as OPEC failed to agree on easing of production quotas. The UAE, which has invested heavily in production infrastructure in recent years, is keen to increase output but proposals for a gradual increase from Saudi Arabia failed to satisfy the Emirates. The stalemate will no doubt be resolved but meanwhile the market sees a tightening of the supply-demand fundamentals maintaining upward pressure on price. The rapid pace of economic recovery in the U.S. is also lending support to prices, even though U.S. oil demand has been slow to recover to pre-pandemic levels.
OPEC failed to agree on easing of production quotas