Global crude oil markets edged higher

 Flows of Russian gas came through the Yamal pipeline

Arriving a day late, the resumption of Russian gas flows into Germany was a welcome development albeit the quantities proved to be disappointing.  Flows of Russian gas came through the Yamal pipeline and resulted in some positive sentiment across broader European markets.  UK NBP gas contracts were weaker from the outset and the market was happy to give up most of the gains added in the previous session.  The front month December contract traded in negative territory all day and reached a low point of 180.80p before settling at 187.19p, down by 15.72p.  Forecast demand came in at 218MCM and with the weather remaining mild the system ran with a surplus of 22MCM.

Baseload futures tracked gas prices lower

Baseload futures tracked gas prices lower as the NBP eased on increased flows of gas from Russia as Gazprom made good on its promises to commence storage injections at European sites.  Flows commenced at low levels, but the expectation is that these will ramp up in coming weeks.  Both the December and Q1 2022 baseload power contracts shed significant premium with an average of £10.00 coming out of prices.   The day ahead baseload contract increased by £7.80/MWh as wind generation output was forecast to reduce for today.  The day ahead contract settled at over £200.00/MWh.

Some concern about the supply/demand balance

Global crude oil markets edged higher yesterday and extended gains from the previous two sessions.  Market fundamentals drivers remain unchanged from recent days with the same issues providing support for prices.  Once again there is some concern about the supply/demand balance as the OPEC plus group’s limit on production combines with the possible increase in demand that will flow from the new U.S. infrastructure package.  At market close on Tuesday the Brent crude contract was priced up by $1.33 at $84.76 a barrel while WTI added a similar amount as it closed at $84.15 a barrel.

Crude oil markets are threading water this morning

The programme to replenish European gas storage stocks by Gazprom commenced in earnest yesterday and continues today and is providing downward price pressure across gas markets.  The UK gas market has opened significantly lower with downward pressure being exerted across the full curve.  The front month December contract has shed 15.43p as it trades at 171.75p/therm.  Q2 2022 is priced at 168.50p, down by 13.50p from last nights close.  EUA carbon contracts are yet to respond to the general bearish sentiment and are flat to last night’s close.  Crude oil markets are also threading water this morning as the both the Brent and WTI contracts trade flat to last night’s settlement.