UK gas prices opened with sharp gains on Tuesday
UK gas prices opened with sharp gains on Tuesday, and these were extended throughout the day. Reports of an outage at the Nyhamna processing plant drove prompt prices higher early in the session but gains were capped with news of increased wind generation for the remainder of the week. The outage could take three days to resolve and 20MCM of supply is affected according to the operator Gassco. NBP futures for September and the winter months settled between 7.50p and 8.10p higher yesterday as supply concerns continue to dominate market fundamentals. UK storage supplies have been restocked during August and are at around two thirds of capacity but are at the lowest level for this time of year for some years meanwhile LNG tankers are still drawn to Asia with no deliveries scheduled for the UK.
Futures have recovered almost all of the premium lost last week
The gas supply concerns which are driving gas prices across Europe higher supported the GB baseload curve yesterday. Futures have recovered almost all of the premium lost last week over the previous three sessions. The front month added £5.15/MWh to close at £108.00/MWh while the winter contract settled at £113.85/MWh up £4.35/MWh. Forecasts for wind generation to rise above the average levels for August along with increased nuclear capacity countered any uplift for the day ahead product yesterday. The contract closed at £111.00/MWh down £2.53/MWh from the previous close.
The crude oil markets continued to recover
The crude oil markets continued to recover on Tuesday on news of the Pfizer-BioNTech vaccine received approval for the U.S. and a fire at a Mexican offshore platform. The U.S. FDA gave full approval to the vaccine which was on license for emergency use only in the U.S. until now. This was taken by the market as a positive move against the latest strain of the coronavirus as crude oil prices rose between $1.90 and $2.30 a barrel yesterday. A fire at a Pemex offshore oil rig added to the upside in prices yesterday after five workers died and production will be curbed by around 420,000 barrels per day.
The crude oil markets have opened lower
Gas futures have opened firmer at the NBP with the front month and winter adding 2.00p in early trading. The prompt looks like it will open flat or marginally up but as of 10:00hrs there were no deals struck. The GB gas system is running with a modest surplus as demand has dropped by 14MCM from yesterday’s levels. Norwegian imports are nominated at 60MCM for today with 41MCM arriving through the Langeled feed. The crude oil markets have opened lower with Brent and WTI around 20 cents a barrel down. The focus today will switch to the Energy Information Administration and the release of the latest U.S. crude oil inventory report due later today.