Energy Market Analysis – 01-03-2013 1st March, 2013 Nick Boyle
Yesterday’s comfortable balance and lower storage withdrawals could have pressured prices quite a bit yesterday… but this didn’t happen, as NBP spot and near curve gas prices remained strong. UK gas stock levels are now so low that any cm of withdrawal will raise overall market concerns.
Turning to power, we saw spot prices fall yesterday – and we expect more decline over the next few days as temperatures creep up. Weather also had an impact on Week-Ahead prices, which were forced down by an upward revision in temperatures for next week.
How did the energy markets close?
The largest gains in the gas market were seen on March-13’s price; trading at 69.50ppt because of lower storage levels. Despite Linepack losing length as the session got underway, Day-Ahead gas refused any movement and stayed at around the 70ppt marker.
Because of lower peak demand forecasted for today, Day-Ahead power dropped £2.50/MWh yesterday. In contrast, contracts out on the curve made gains during trading – with Summer-13 closing at its highest price since November.
How did the energy markets open?
We saw small gains for NBP gas contracts again this morning – which continued to ignore the decline in Brent and a balanced system. In other news, imports from the Bacton Interconnector fell to 18mcm as gas demand lowered.
Power’s opening was met with mixed sentiment, with Day-Ahead and new Front-Month holding their closing prices. Elsewhere, lower nuclear availability failed to add pressure to the prompt.
1-year forward prices
Market close data revealed that the 1-year forward prices for business electricity and business gas both experienced small rises – with power now trading at £52.81/MWh and gas trading at 68.92ppt.
Latest Brent Crude Oil prices
Brent prices continued their free-fall yesterday and touched a low of $110.68/bbl this morning before rising a little to $111.2/bbl.
There was an unexpected rise in gasoline prices this morning; which is likely to be linked to the expiration of the US contract.
Today, we continue to focus on the Eurozone PMIs and employment data – particularly those from Italy. There could be some upward movement from the US ISM, but a weak rise in appetite linked to Chinese PMI, Eurozone issues and US spending cuts should overcome this.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.