Crude oil prices declined for the second day in a row

 UK gas system was balanced by the afternoon

A tight gas system continued to cause concerns for the NBP gas market on Thursday, but prompt prices fell on day as the UK gas system was balanced by the afternoon.  The spot and day ahead closed over 2.00p down as supplies from Norway increased to cover the morning deficit. Demand was just 133MCM, but LNG send out fell below the average send out for July yesterday which is already down to around 25% of the levels seen last July, meanwhile storage reserves remain below 25% of capacity.  On the curve, futures at the front of the curve shed an average of 2.30p while contracts from next summer out recorded losses averaging 0.40p.  

Baseload for the day ahead declined

Baseload for the day ahead declined by over £4.00/MWh on Thursday despite forecasts for wind generation to decrease.  The power prompt looked to falling prompt prices on the NBP yesterday and the expected drop in wind curbed losses on the day.  Wind generation is expected to fall by around 20% to around 4.0GW for today. The GB power futures market also tracked the NBP lower yesterday, and near contracts averaged losses of £1.55/MWh. While futures past the front winter contract generally declined yesterday losses were more marginal.

U.S. crude oil stocks fell by 7.9 million barrels last week

Crude oil prices declined for the second day in a row yesterday with Brent closing $1.29 a barrel down.  It’s only the second time since mid-May that the global benchmark has recorded back-to-back losses. The news of Saudi Arabia and the United Arab Emirates reaching a compromise which could see more crude oil being released into the market weighed on prices yesterday although discussions between the two are believed to be still ongoing. U.S. crude oil stocks fell by 7.9 million barrels last week and reserves are just below the five-year average at 437.6 million barrels.  This would normally boost crude oil prices but the report from the Energy Information Administration also showed gasoline and distilled products were topped up.

The gas system looks to be much healthier

The gas system looks to be much healthier than at this time yesterday and has opened long with a surplus of 7MCM against today’s forecast demand of 133MCM.  Supplies are made up largely the same with Norwegian flows of 67MCM and LNG send out at 6MCM.  The NBP prompt market has yet to get going and even bid and ask prices are absent from the board.  NBP futures opened softer, but prices have moved higher in the last half an hour with both August and September reversing yesterday’s losses and currently over 2.25p higher. Brent is 13 cents above last nights close at $73.60 a barrel.