Open Market Snapshot - 4 June 2018

The Open Market Snapshot is the weekly update that brings commercial energy buyers to up-to-speed with the UK markets in a minute. It's just part of the Market Intelligence we publish every week, including our in-depth Open Market Report and twice-daily notifications in our Open platform.

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Open Market Snapshot

> Market Snapshot: 4 June 2018

Currency: S&P 500 Stock Index

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Economics

  • With the League and Five Star Movement having succeeded in forming a government, Italian political and economic concerns have eased in the near-term.
  • Trade talks between the US and China are in jeopardy as Trump continues to threaten 25% tariffs on Chinese high-tech goods.
  • Friday’s US jobs data showed the unemployment rate at an 18 year low of 3.8%. The S&P 500 rose 1.08% on Friday.

Brent Crude Daily

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Oil

  • The next OPEC meeting will be on 22 June. Russia (not an OPEC member) and Saudi Arabia want to raise production. Venezuela and Iran are unlikely to agree to production increases as this will reduce prices as they are unable to raise production.
  • Hedge Funds continue to reduce bullish bets on crude oil prices, as shown in the weekly CFTC report in the US.
  • The spread between Brent (UK) and WTI (US) crudes is over $10, suggesting the potential for increased US oil exports onto global markets
  • Chart analysis would suggest the potential for further moderate near-term price downside for Brent crude.

UK Gas (Winter '18) - [indicative of the Power Market]

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Gas & Power

  • In comparison to previous weeks, Interconnector gas exports to Belgium have remained low since late last week. Langeled flows to the UK are at seasonal normal levels (circa 25 mcm) and circa 100 mcm of Norwegian production is offline currently.
  • Five LNG cargoes (four of which are confirmed) are expected into the UK by mid-June (a number up two from last week). The lack of LNG cargoes arriving into South Hook has been a concern for the market in recent weeks.
  • Injections into European storage are continuing at unprecedented levels. Storage levels are 8% below last year’s levels, but on a par with levels in 2013 (the year that previously held the lowest storage levels).
  • Chart analysis suggests the potential for further near-term downside in the benchmark Winter’18 gas contract.
  • Power prices are broadly following gas.

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