After the significant market correct from Friday and Monday the bearish direction is back in full swing. Gas currently remains oversupplied as infrastructure returns at BBL. The issues in the Ukraine have not really impacted on physical flows following the explosion at a pipeline carrying gas through the region.
Electricity prices have also fallen in line with their gas counterpart delivery periods. Both gas and power demand remains subdued, in part due to the warm weather. The stronger UK currency is also helping keep related commodities in check but Brent Crude still has some premium from the current uncertainty in Iraq.
Demand for both gas and electricity remains lower than seasonal norms. Gas storage is over 75% full and set to be full before the end of the summer season. These factors alone are weighing on the commodity price and most prominently on nearer delivery dated contracts. Although farther delivery dates remain close to record lows they are still carrying healthy premiums to the spot. The events in the Ukraine and Iraq will be watched closely.