Multiple factors were at play on the oil market yesterday
15 July 2021
Improved supply-demand balance helped prompt gas prices lowerA significant increase in renewable power generation on Wednesday saw gas demand falling to 125MCM on average and supply running up to 10MCM long. The improved supply-demand balance on the UK gas system helped prompt gas prices lower with day ahead and week ahead prices shedding 1.85p and 1.45p respectively. An increase in storage injection rates and the prospect of increased Russian supply over the winter months helped ease futures prices also. Near futures contracts were down by as much as 2.00p despite a dearth of LNG cargoes and historically low storage levels with ongoing limited injection rates.
GB power prices lower on WednesdayGas and carbon prices eased; leading GB power prices lower on Wednesday. Prior to the announcement of the EU’s plan for 55% emissions reduction by 2030, carbon prices gained €2.00 per tonne but fell back later as most of the measures revealed were in line with expectations. Free EU Allowances are to be eliminated by 2027 with all EUA’s going to auction. A significant increase in renewable power generation on the day saw gas demand falling to 125MCM on average and supply running up to 10MCM long. Renewable generation doubled day-on-day with over 10GW coming on stream yesterday.
Having established a platform above $75.00 a barrel over the previous 3 sessions, Brent crude dropped below that threshold again on Wednesday, settling at $74.76 a barrel. Multiple factors were at play on the market yesterday. It is believed that Saudi Arabia and the UAE have resolved their differences following their failure to reach agreement at the recent OPEC+ meeting and that production restrictions will continue until year end. The weekly U.S. inventory data showed a big drop in crude stocks, normally a bullish factor but gasoline stocks rose by 1 million barrels last week, suggesting slowing demand. Coronavirus infection rates reached record highs in Indonesia, Malaysia and Thailand while Russia recorded its daily death rate from Covid-19 to date.
U.S. inventory data showed a big drop in crude stocks