The UK gas system was better supplied
The UK gas system was better supplied on Tuesday with the system opening long by some 15MCM as demand dropped off as cooler temperatures resulted in lower demand for cooling. The lower demand for gas has resulted in some increases in storage injections. The decline in the crude oil market on the last few sessions has clearly put some price pressure on the UK NBP and price declined across the curve yesterday. In the context of recent gains, it was good to see the lower prices, but contracts remain significantly elevated. The front month September contract shed 2.79p over the course of the session and is now priced at 104.59p per therm.
GB baseload power futures went lower
GB baseload power futures went lower on Tuesday despite power fundamentals remaining broadly unchanged. The Front month September contract did open firmer but these gains were soon unwound as selling activity increased. This contract shed £2.50 to close at £101.50/MWh. The day ahead price shed £7.85/MWh as wind generation is expected to rise in the coming days. Output on the day was 2.2GW which remains below the norm for this time of year. EUA carbon contracts firmed slightly as 12 cents was added to all periods.
Crude oil remained somewhat weak
Crude oil remained somewhat weak during trading on Tuesday and prices declined once again although the losses were not as marked as the previous session. The market remains concerned regarding the prospect of weaker demand as corona virus cases increase in some major oil consuming economies. The continued spread of the more virulent Delta variant has caused a number of countries to impose restriction to contain the virus. The Brent crude contract traded to a low of £71.05 a barrel during the session yesterday but rallied somewhat towards the close to finally settle at $72.41 a barrel, down by 48 cents.
Gas markets have opened stronger
Gas demand remains on par with yesterday and is forecast at 122MCM. The system is finely balanced at the moment with demand and supplies evenly matched. Supplies through the St. Fergus terminal are running at 48MCM and this account for over 38% of the total. Overall beach supplies are coming in at just over 110MCM. Gas markets have opened stronger this morning with the front month adding 0.86p as it trades at 106.25p. Likewise, Winter 2021 has firmed to 104.75p, up by 0.75p from last night’s close. Crude oil markets are trading close to where they finished last night with Brent at £72.52 a barrel.