Brent retraced almost all the losses from Monday

 Unplanned outage at the Norwegian Troll field

A recurrence of a compressor failure at the Norwegian Troll field caused another unplanned outage and this along with concerns of Russian gas supplies buoyed the gas markets on Monday.  It is estimated that output may be cut by 20MCM for the next few days due to the compressor issue at Troll.  Meanwhile reports showing gas flows into Germany via Poland from Russia are down to around half the levels seen in July after a fire at the gas plant at Novy Urengoy last week.  Higher crude oil prices also added to the mix yesterday as September settled 4.27p higher at 111.55p.  

 Forecasts for increases in wind generation

The sharp gains in UK gas prices fed into the baseload power market on Tuesday with near futures closing an average of £2.35/MWh higher.  The September contract closed at £107.25/MWh, setting a new record for the front month while the winter contract also settled at a fresh all time high at £110.50/MWh. Forecasts for increases in wind generation weighed on power prompt prices on Tuesday as the day ahead product eased by over £5.00/MWh.  The contract remains elevated at £106.61/MWh, but renewables are expected to improve today with wind generation forecast to rise above 4.0GW.  

 Crude oil prices rebounded on Tuesday

Crude oil prices rebounded on Tuesday with Brent retracing almost all the losses from Monday as the market is lifted by forecasts for rising fuel demand in the U.S.  In the latest monthly report, the Energy Information Administration expect U.S. gasoline consumption to be 10% higher in 2021 over 2020 as job growth and increasing mobility is expected to outweigh any decline due to the spread of the Delta variant. Gasoline stocks in the U.S. have fallen for the last three weeks and are predicted by some industry bodies to be lower again this week.  The official weekly report is due to be published later today by the EIA. Brent closed $1.59 as barrel up at $70.63 a barrel.  

The UK gas system has opened in better shape

The UK gas system has opened in better shape this morning with supplies forecast 16MCM long against today’s demand of 140MCM.  Norwegian flows are just under 60MCM today while LNG send out is a little higher at 8MCM.  Trading on the prompt has been thin but both the spot and day ahead have eased marginally in early exchanges.  NBP futures had opened firmer with the front month peaking at 112.62p but has retreated and is now flat to last night’s close.  The winter contract last traded 0.83p higher but that trade was completed before 09:00am. Crude oil prices have kept to a tight range this morning and both benchmarks are slightly lower.