Oil Prices Rise As Vaccine Rollout Continues
Currently, below average temperatures are forecasted for the central and eastern U.S. through the end of April but a warmer than normal summer in areas with severe drought conditions such as California could mean a greater chance of wildfires. This would subsequently lead to a larger chance for price volatility but, if the summer is colder than expected in the West the market could ease off the price premiums that have been affecting California because of the current climate conditions.
Jobless claims fell to 576,000 last week which is the lowest since the pandemic began as we are moving in the right direction with more vaccine rollouts. U.S. oil prices top $60 a barrel on hints of an uptick in demand. Oil prices rise on vaccine progress and reports of attack on Saudi oil facility. OPEC increased its 2021 global oil demand forecast by 1 00,000 barrels a day from its previous expectations. Global oil demand is expected to climb by about 6 million barrels per day to reach 96.5 million barrels per day this year. The May 2021 natural gas contract is trading down $0. 02 at $2.60. and the May 2021 crude oil contract is down $0.30 at $62.85.
Natural gas pricing plays a key role in electricity power pricing due to the increasing reliance on natural gas fired generat ors as nuclear, coal, and oil generation is retired and mothballed. As the marginal unit of generation, gas prices are directly correlated to power pricing (more so in some regions such as NYC vs. others such as parts of PJM). We keep an eye on natural gas market fundamentals in order to provide insights into forward power pricing for our clients. Gas production has grown and surpassed any speculation that production would not be able to keep up with demand due to LNG and Mexican exports.