Crude oil prices declined for the second session in a row

Volatility on UK NBP gas markets during Wednesday

There was significant volatility on UK NBP gas markets during Wednesday as contracts opened firmer from the outset and then extended gains into the afternoon session.  The October contract being a case in point which was up by 4.75p on opening before it peaked at a high of 134.50p per therm at one stage.  The contract see-sawed for much of the afternoon but then settled at 127.75p, flat to the previous session.  Other contracts at the front of the curve displayed similar movement with minor gains for November and December coming in at 0.04p and 0.29p respectively.  Further out the curve price movement was minimal with the front Summer settling at 73.35p per therm, down by just 0.27p.

 Considerable level of volatility on power markets

The new October front month baseload power contract shed value during Wednesday’s market in line with losses on gas and EUA carbon markets.  The was a considerable level of volatility on power markets with prices moving between gains and losses over the course of the session. Baseload for the day ahead gained sharply on Wednesday and settled at £148.00/MWh.  Low wind generation was the main driver and this support for the prompt is expected to continue for the rest of the week as wind generations stays below the seasonal.

 Significant level of crude oil production was taken offline by the hurricane

Crude oil prices declined for the second session in a row with the Brent crude contract shedding $1.40 to close at $71.59 a barrel.  Wednesday marked the final day of trading for the October 2021 contract with November 2021 taking over front month status.  With the impact off the Hurricane Ida now waning it would appear that operations are slowly beginning to return to normal in the Gulf of Mexico.  A significant level of crude oil production was taken offline by the hurricane and the resumption of normal activity is putting some pressure on prices.  The OPEC cartel meets today to discuss increasing output which is likely to give the market further direction in short to medium term.

Gas contracts move between minor gains and losses

Gas markets are difficult to call at this stage in the morning as contracts move between minor gains and losses in the early part of the session. An early loss of 0.70p on the front month October contract has now been replaced by a gain of 0.50p in the last trade.  Similar movement is being observed on other contracts that have traded thus far. Forecast demand for today is coming in a 149MCM and the system is operating with a healthy surplus of 12MCM as supplies come in at 161MCM.  LNG supplies are entirely absent this morning with the main source of supply coming from the St. Fergus terminal.  Crude oil is trading up by 14 cents at $71.73 a barrel.