Crude oil markets are extending the gains

22 September 2021

 Prices remain at record highs

Following extraordinary gains on the NBP market during Monday’s session, trading on the European gas market was much more muted during Tuesday.  That said, prices remain at record highs and the market retained the majority of the premium from the previous session as only a relatively modest amount of premium came out of contracts.  At one stage the front month October contract was down by 10.21p but these losses were pared later in the day and November settled at 186.10p per therm, down by 3.55p.  The Winter 2021 contract had a similar journey and at settlement was priced at 189.11p, down by 2.77p.  the outage on the Elgin Franklin field appears to be resolved and flows ramped up over the course of the day.

 The day ahead contract remains elevated

Baseload power for the component parts of Q4 2021 increased against the falls in value on the UK NBP gas market.  The front month October contract added £6.00 to close at £182.00/MWh despite losses on the equivalent gas contract.  The outage on the French interconnector is clearly providing support to the near term.  Latest reports suggest a full return by October 22nd.  The forecast increase in wind generation did materialise and the prospects for a greater contribution from this source turned more positive.  The day ahead contract remains elevated but, on the day eased by £20.00 to close at £157.00/MWh.

 Stability returned to equity markets

The rise in the value of the dollar was arrested somewhat on Tuesday as stability returned to equity markets.  As a result, the decline in the value of crude oil stopped and a modest amount of premium was added to the Brent and West Texas Intermediate contracts.  The Brent crude contract was up by $1.26 at one stage as crude oil markets welcomed the return of some stability in global stock markets.  These gains were pared over in the later part of the session and Brent eventually finished at $74.36, up by just 44 cents on the day.  The WTI contract had a similar journey and closed at $70.49, up by a modest 44 cents.

 GB gas system has opened with a healthy surplus this morning

The GB gas system has opened with a healthy surplus this morning as flows continue to ramp up from the Elgin- Franklin fields.  Day on day demand has dropped to 121MCM and the system is currently running with a surplus of 28MCM.  The NBP futures market has opened softer once again and as trading activity ramps up these losses are being sustained.  The October contract last traded at 179.18p and is down by 6.92p from yesterdays close.  Similar losses are being experienced by other Winter delivering contracts.  Crude oil markets are extending the gains from yesterday’s session with Brent crude priced at $75.18, up by 82 cents from last night’s close.