Crude oil prices slipped by a dollar on Thursday

Demand on the UK gas system eased on Thursday

Demand on the UK gas system eased on Thursday as renewable power generation picked up as forecast and the system ran in supply surplus throughout the day.  Despite the healthy supply-demand situation, prompt gas prices still gained an average of 1.34p day-on-day.  The futures market recorded further gains on Thursday though less than the previous session and nothing like the surge seen on Tuesday.  The front month gained 1.77p while Q4 was up by 1.54p and all are up by over 15.00p over the last 5 sessions.  The low levels of storage and LNG deliveries to the UK and North-West Europe in general is maintaining pressure on near futures prices and this situation is unlikely to change dramatically until significantly more LNG shipments begin coming to Europe rather than Asian markets.

GB baseload power futures gained again on Thursday

GB baseload power futures gained again on Thursday as gas and emissions prices moved higher again.  The expected return of two 585MW nuclear generators at Heysham this weekend, will reduce the recent high reliance on gas-fired plant.  Q4 gained £0.95/MWh while the full Winter 21 contract was up by £0.90/MWh. Forecast lower wind availability for today saw the day ahead baseload power price gain £2.50/MWh yesterday.  Wind generation is expected to fall to 2GW today and overall renewable generation to around 4GW, half of Thursday’s output.

 EU ETS unit prices gained to finish at €57.00 per tonne

Crude oil prices slipped by a dollar on Thursday with Brent settling at $71.07 but the global benchmark looks set to reverse last weeks losses and finish above $70.00 again this week.  Prices see-sawed considerably towards the close of business as platform workers were evacuated from production facilities in the Gulf of Mexico ahead of the latest tropical storm due to hit the region today.  The overall dynamic of the market continued to be swayed by the increasing incidence of the Covid Delta variant globally with the potential to require further lockdown and impact oil demand recovery.  Emissions prices moved slightly higher on Thursday with EU ETS unit prices gaining 36 cent to finish at €57.00 per tonne.

Gas futures are strengthening again

Demand on the UK gas system remains some 20MCM below the seasonal norm despite a halving of renewable power generation. The system is well-supplied and is forecast 7MCM long for today.  Wind generation levels have fallen to just 2GW as forecast and combined renewable generation is running at 4GW this morning.  Gas futures are strengthening again as concerns increase for winter supply against the background of low levels of storage and LNG deliveries to the UK and North-West Europe in general.  Oil prices have recovered yesterday’s losses overnight and Brent crude is up by $1.05 to $72.12 a barrel.