The oil market took another step higher on Monday

Gas prices relinquish most of Friday’s gains

The comfortable UK gas system supply-demand balance on Monday saw prompt gas prices relinquish most of Friday’s gains while the pattern of futures price movement was also reversed.  Langeled flows picked up mid-morning and the system moved to surplus causing prompt gas prices to trade down with spot and day ahead prices shedding 2.50p while remaining prompt price fell by a similar amount leaving all prompt contracts trading below 65.00p again.  On the futures market, the front month eased slightly but contracts along the curve gained marginally day-on-day.  

Both EU and UK carbon prices gained by under €1.00 and £1.00 per tonne respectively

GB power futures recorded some mixed movement on Monday with contracts for Q3 and beyond gaining on rising coal, oil, and carbon.  The front month was unchanged but Q3 gained by £0.90/MWh while the front winter was up by only £0.15/MWh.  Both EU and UK carbon prices gained by under €1.00 and £1.00 per tonne respectively. The day ahead baseload price was little changed with wind generation forecast to increase from 5GW yesterday to around 7GW today.  News that the 1GW Brit-Ned interconnector will not now return to service until mid-June had little impact as demand is forecast to fall from next week.  

Monday’s move higher was largely down to concerns that talks between Iran and the U.S. had stalled

The oil market took another step higher on Monday with Brent gaining $2.00 to $68.46 and West Texas Intermediate posting a $2.39 a barrel gain to settle at $65.97.  Monday’s move higher was largely down to concerns that talks between Iran and the U.S. had stalled over the weekend and that an early lifting of U.S. sanctions seemed less likely.  It would seem that the market had, partly at least, already factored in an increase in Iranian crude exports which might result in global over-supply.  A further weakening of the dollar also added to the upside on the oil market yesterday.  Carbon prices reversed Friday’s losses with EU ETS unit prices gaining an average of €1.00 per tonne.    

Crude oil has shed some of yesterday’s gains

Demand on the UK gas system has fallen to 178MCM and the system is currently forecast 12MCM long for today.  Norwegian deliveries and LNG send-out are providing around 70% of total demand which is slightly below the seasonal norm as, surprisingly, no storage injection is currently taking place.  Within day gas has yet to trade but day ahead is trading at 65.00p, 1.35p up on last night’s close.  The front month has gained 0.86p in early trading but there is little liquidity beyond that.  Crude oil has shed some of yesterday’s gains with Brent currently trading 60 cents lower at $67.86.  Carbon prices continue to recover from last week’s losses and EUA’s are up by a further €1.00 per tonne this morning.