An invasion by Russia could threaten crude oil supplies

 Natural gas futures edged higher through the morning eroding the earlier losses

Having opened softer on Tuesday, natural gas futures edged higher through the morning eroding the earlier losses. Near curve contracts settled marginally higher while contracts covering the summer and next winter months held gains of around 5.50p. The tensions between Russia and Ukraine continue to provide support which is countering pressure from the abundance of LNG heading to Europe. Britain is on target to receive 35 cargoes in January, a new record for LNG deliveries.  Indeed, LNG played a key role in GB supplies yesterday with send out in excess of 110MCM.  On the prompt, the spot and day ahead settled slightly down on the day with both contracts closing at 221.05p.

Baseload futures settled higher for the fourth session

Baseload futures settled higher for the fourth session in a row on Tuesday.  Bullish gas and carbon prices added support as the front months settled £2.00/MWh higher at £222.00/MWh.  Carbon EUAs out to 2024 moved 4.4% or €3.70 per tonne higher yesterday as contracts settled at a three-week high. Baseload for the day ahead reversed almost all the previous session’s gains to settle at £195.14/MWh.  Wind generation is forecast to increase on Wednesday with levels to exceed 8.5GW which is more than three times the output for Tuesday.

 Crude oil prices reversed Monday’s gains yesterday

Crude oil prices reversed Monday’s gains yesterday as tensions between Russia and the Ukraine increase. A Russian invasion of Ukraine is looming large as more nations have moved to recall diplomats and embassy staff. Brent rose by almost $2.00 a barrel yesterday as fears of an invasion by Russia could threaten crude oil supplies.  Russia remains one of the world’s top oil producers with an average production of 10.5 million barrels per day during 2020, it accounted for 11% of total global production.  The markets will look to the west later today when the U.S. weekly inventory data is released and for a statement from the Federal Reserve regarding interest rates. Any increase in rates could pressure prices.

Wind generation has increased this morning

As expected, wind generation has increased this morning and has displaced some gas fired generation from the GB power stack.  Gas demand is down to 311MCM for today and the supply side is forecast 6MCM long.  Once again LNG send out is robust with flows over 105MCM while the Langeled feed is running close to capacity at 74MCM. Prompt prices have eased on opening with the day ahead product 4.05p down in early trading.  The front month for the NBP is also down with the last trade going though at 218.54p.  Brent last traded 72 cents a barrel higher at $88.92 a barrel.  

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