Oil prices failed to recover much of the premium shed
21 July 2021
The see saw nature of the UK NBP gas market continuedThe see saw nature of the UK NBP gas market continued during Tuesday session with prices opening weaker from the off. Over the last five sessions gas contract have shed over 4.00p per therm in premium in two days only to be followed by similar gains in the next two session. Tuesday’s market continues this trend as early losses were extended over the course of the day. The front month august contract fell to a low of 84.85p before rallying to close at 87.65p, down by 0.73p. Over the last five days price movement has been minimal despite daily increases and falls. Winter 2021 settled at 92.97p, down by just over a penny.
EUA carbon contracts posted lossesThe GB power market went lower yesterday following two sessions of gains as losses on the wider energy complex impacted. While the gas market continues to be volatile losses were posted on all contract across the curve. Likewise, EUA carbon contracts posted losses with contracts moving lower by over a €1.00. The day ahead contract shed £2.65/MWh despite wind generation remain weak although prompt gas prices did provide some downside. Wind generation remained below 1GW on the day and this level is expected to persist in the coming days.
Following the previous session’s large loss of premium on crude oil contracts the market was in more benign mood on Tuesday. Crude oil prices failed to recover much of the premium shed in the previous session with contracts trading to a high of $69.60 and a low $67.44 before trading activity petered out and contract settled at $69.35 a barrel, 73 cents higher than the previous settlement. The fact that OPEC+ has now agreed to ramp up production from next month combined with doubts about economic recovery is likely to pressure the oil market in the short term. It remains to be seen if crude can establish a foothold above $70 a barrel in the near future.
Crude oil market was in more benign mood