Crude oil prices edged higher yesterday retracing Tuesday’s losses

Gas Market

Forecasts for lower renewable generation for the week ahead pushed up prompt prices on the NBP all save for the spot which was on the only product to post a loss.  Near months also firmed yesterday with the July and August months settling over 3.00p higher on the day.  Contracts from the winter out closed with minor gains of around a penny after oscillating between losses and gains earlier in the session. On the prompt, the spot shed a penny while the day ahead product settled 1.65p higher.  Supplies continue to be supported by LNG deliveries with three tankers due in the UK by the start of next week while Belgium’s Zeebrugge terminal is expecting eight cargoes over the coming two weeks.

Power Market

GB baseload power futures at the front of the curve were supported by the gains on the NBP curve and higher carbon prices on Wednesday.  The July contract added £2.20/MWh to close at £77.95/MWh while August settled up by a similar amount at £76.65/MWh.  Longer curve contracts settled mixed on the day.  Carbon EUAs firmed yesterday with the Dec-23 contract adding €2.20 to close at €83.85 per tonne. Baseload for the day ahead eased yesterday but forecasts for lower wind generation could see the contract firm over the next couple of days.  Wind generation is pitched at around 5.5GW or 20.5% of demand for today but is to ease from the weekend.

Oil Market

Crude oil prices edged higher yesterday retracing Tuesday’s losses as the proposed production cuts by OPEC+ countered demand concerns arising from increased U.S. fuel stocks and disappointing export data from China.  Prices increased on Monday following the surprise announcement at the weekend from the group, to cut production targets by a further 1.4m barrels per day in 2024.  Yesterday prices opened softer following poor export data for May from China but switched tack as the OPEC cuts began to build a head of steam again. However, gains were cooled later in the session after the Energy Information Administration released the latest U.S. inventory report which showed a larger than expected build in distillate stocks.  Diesel reserves grew by 5.1m barrels while Gasoline reserves were topped up by 2.8m barrels.

Markets this morning

The gas markets have shown some volatility this morning with July the front month, opening flat dropping to a low of 60.43p below rebounding to last trade at 65.71p, rising over 5.00p intra-day or 3.44p from yesterdays close.  The winter contract last exchanged at 108.50p, up 1.57p while contracts further out have yet to trade.  Only the day ahead has traded on the prompt screen and this is showing a minor gain to yesterday’s close.  The gas system is forecast over 10mcm shy to demand of 148mcm.  In the crude oil markets, Brent is down 37 cents to $76.58 a barrel.  

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