Crude oil markets held their position at two year high

18 January 2022

UK gas prices opened lower this morning

UK gas prices opened lower this morning despite the arrival of colder weather across much of the region.  The cold snap is expected to remain for the next number days and flexible gas supply will be key during this period.  The outlook for continued strong deliveries of LNG remains positive and this will be an important element of the supply mix given the lack of Russian gas.  The outage on the Troll gas field is expected to continue for a number of days year but the market appears to have moved on from this.  Events in the U.S. Senate may provide the impetus for the lower prices as a Republican effort to beef up sanctions on Russia was averted allowing the Biden administration a more flexible approach to the ailing talks.

GB baseload power market went lower on Monday

The GB baseload power market went lower on Monday as it responded to losses in the NBP gas market.  As with the gas market the power curve initially went higher but failed to hold onto these gains.  The front month February contract fell by £16.25 as it closed at £199.00/MWh.  While this decline was welcome some of the premium added in the last two sessions remains.  The Summer 2022 contract retraced all of the gains added in the previous session as it fell by £9.40 to £148.50/MWh.  The day ahead baseload contract also eased on improving wind generation and settled at £199.88/MWh.

 Crude oil markets had a relatively quiet day on Monday

Crude oil markets had a relatively quiet day on Monday as markets were somewhat subdued as the U.S celebrated Martin Luther King jnr. Day with a public holiday.  There was sparse trading on the markets and neither the Brent nor West Texas Intermediate contracts moved too far from their previous settlement for most of the session.  That said, crude oil markets maintained their position at an almost two year high and 42 cent of premium was added to contracts in the final part of the session.  Dollar weakness remains a key concern as this often leads to investors seeking protection in crude oil which is a dollar denominated commodity.

Trading on crude oil markets is brisk

Gas prices opened higher this morning but there were very few takers and markets have reversed track in the last hour of so with the front month contract trading 1.35p lower than last night’s settlement.  The Summer 2022 contract is displaying a 6.00p increase at the moment but bid/offer spreads are well below that level at this stage, so we expect to see a lower price on the next trade.  UK gas demand is currently forecast at 338MCM, and the system is currently short by 21MCM although LNG and medium-term storage facilities are ramping up and it is expected that this deficit will be closed in the coming hours.  Trading on crude oil markets is brisk and Brent is priced at $87.65, up by $1.17.  
Read more carbon market news in our Insights section