Crude oil prices were buoyed by latest U.S. economic data yesterday

17 May 2024

Gas Market

Low wind generation and concerns of slowing LNG deliveries boosted the prompt yesterday.  Fundamentals remain healthy but the markets have concerns around LNG deliveries with just the second cargo of the month due at GB ports by the start of next week as prices in East Asia prove to be more attractive.  Forecasts for wind to average below 4.0GW could increase gas demand next week while more planned maintenance is expected to curb Norwegian gas imports.  The Spot and Day ahead products added an average of 2.40p per therm while the contract for working days next week also settled 2.40p higher at 74.00p.  The prompt led gains fed into the near curve leaving the remaining months of the summer an average of 1.20p higher with June closing at 73.03p.  

Power Market 

Forecasts for a shortage of wind generation across northern Europe next week boosted power prices in most European markets yesterday. GB baseload futures added 2.3% or an average of £1.65/MWh yesterday with higher gas prices also providing some support.  The Day ahead posted a modest increase yesterday but had already responded to the low wind forecasts earlier in the week and settled at £72.96/MWh. Carbon prices switched tack yesterday as early losses were reversed while gas prices edged higher. The Spot for EUAs settled €1.08 higher at €68.49 per tonne while contracts for 2024 and 2025 gained around 2.4%.  

Oil Market

  Crude oil prices were buoyed by latest U.S. economic data yesterday. Inflation for the world’s largest oil consumer slowed in April which refueled hopes of an interest rate cut as early as September. It has been a positive week for U.S. data with the number of claims for unemployment benefits falling last week pointing to a stronger labour market and hopefully leading to increased oil demand.  This week’s EIA report for crude oil showed reserves of crude oil and distillate stocks fell last week on the back of increased refining activity and fuel demand ahead of the start of the summer driving season which kicks off at the end of the month.  Tensions in the Middle East remain on edge as the truce negotiations have stalled and Israel continues to bombard the city of Rafah.  

Markets this morning

NBP futures have opened firmer this morning with near months around 1.50p higher on average. Fundamentals have not changed but impending maintenance works at the Norwegian Troll gas field coupled with low wind has encouraged buying activity.  According to the Gassco website up to 133mcm could be impacted when the planned works commence on Tuesday and are due to run for two days.  Prompt prices have yet open, but the GB gas system is balanced this morning with demand pitched at 164mcm.  In the crude oil markets, Brent is reasonably flat with the last exchange concluded at $83.36 a barrel.