News

News about geopolitical tensions drove the market two weeks ago, with the world waiting for President Trump to make a decision about pulling out of the Iran nuclear accord. Oil prices saw an added risk premium while the world waited. Saudi Arabia continued to talk up oil prices with OPEC's output down due to political problems in Venezuela and production problems in Angola and Nigeria. US drilling rigs, output and storage volumes continued to creep up. But these factors don't appear to be driving the market. Russian gas continues to flow into Europe as utilities try to replace depleted storage from a low of 18% following the winter. All told, Brent closed the week slightly up at $74.91 per barrel. In the UK, prices remained steady as demand settled with warmer weather. Solar output started climbing again as the days got longer. Renewable output was healthy over the week reducing demand for gas. Two faults and Norwegian gas sites caused price spikes early on in the week and electricity prices continued to track gas prices, despite two outages at nuclear power plants. All contracts saw small prices increases last week. Longer term prices were influenced by rising oil costs, but shorter term prices did start to see some relief from the previous month's weather drivers. Prices for contract starts before October declined with the warmer weather. But the concern now is that depleted gas storage volumes across Europe may not be replenished by next winter. There may be a focus on coal prices over the summer, as the fuel may be used to replace gas generation to allow storage levels to recover. The low gas storage volumes will also affect UK prices as demand for gas from the North Sea may keep prices elevated.