The oil market has turned bullish again with Brent crude up

 Demand on the UK gas system fell further

Gas prices at the NBP relinquished most of Thursday’s gains on Friday which was enough to see the market finish lower for a third consecutive week. As demand on the UK gas system fell further with rising temperatures, gas prices shed premium across the board on the day. For the first time last week, the system ran in deficit for most of the trading day. Despite this, prompt gas prices fell by an average of 1.75p with the day ahead down by 2.30p and week ahead for this week shedding 1.70p. The front month settled 1.94p down at 42.10p while Q2 ended the week at 40.00p.  

 The downturn has generally followed falling gas prices

Thursday’s lift in power prices proved temporary as the recent downturn resumed on Friday with day ahead and front month prices easing by £0.85/MWh. The downturn has generally followed falling gas prices but has been further facilitated by falling carbon prices which relinquished almost a euro per tonne on Friday. The week ahead contract for this week was unchanged despite lower wind forecast. Wind generation averaged around 10GW throughout last week but is expected to average only half that level this week.

Crude oil prices eased for a second consecutive session

Despite a further weakening of the dollar on Friday, crude oil prices eased for a second consecutive session on Friday leaving Brent crude just 48 cents higher week-on-week. Speculation is growing that OPEC and Russia are likely to increase production quotas for Quarter 2 but with the recovery in economic activity still uncertain, prices will likely remain rangebound for the moment. Brent crude settled at $62.91, down $1.02 a barrel while the U.S. benchmark, West Texas Intermediate declined by $1.28 to $59.24 a barrel.

 The gas market is trending lower again this morning

With above normal temperatures reducing heating demand, overall demand on the UK gas system is forecast at just 250MCM today. The system is comfortably supplied with a forecast surplus of 7MCM. The outlook for supply for the remainder of the winter season looks positive, despite dwindling storage stocks, as LNG deliveries are forecast to continue at high frequency next month. The gas market is trending lower again this morning with front month and Summer 21 contracts down by 1.35p and 1.20p respectively. The oil market has turned bullish again with Brent crude up by 66 cents to currently trade at $63.57 a barrel.