Energy Market Analysis – 06-03-2013 6th March, 2013 Nick Boyle
Norwegian exports to the UK rose and stronger imports from the continent combined to push the UK NTS gas system long at the start of yesterday’s demand.
Despite this, near curve prices remained on the up as UK storage levels are now at an all-time low for this period.
In terms of power, a downward correction in temperatures helped week-ahead prices in France and Germany yesterday. On top of this, solar production may be fairly low as we head into next week. All of this may explain the €5/MWh rise in French week-ahead levels we saw during yesterday’s session.
How did the energy markets close?
Losses were seen for gas on the NBP yesterday as Norwegian flows returned to normal levels. Elsewhere, Front Months moved a little from their opening prices as storage levels were worryingly low (just 17% full).
After the previous session’s £11/MWh drop, Day-Ahead levelled out yesterday, closing at £54/MWh. This follows the Day-Ahead contract reaching a 1-year high at the start of the week as prompt gas rocketed due to a fall in supply.
How did the energy markets open?
A long-awaited rise in Brent Crude helped to create some bullish movement in the longer-dated contracts such as Summer-14. This can be put down to positive economic data from the US and China.
This morning’s gas system opened long, but the continued colder weather forecasts edged Day-Ahead up to 74.5ppt.
Today’s power curve couldn’t take one clear direction, with seasonal prices rising while those on the front curve fell. Day-Ahead continued to fall following its recent high – a fall that could be due to the nuclear reactor outage at Dungeness, which we’re expecting to be back online tomorrow.
1-year forward prices
Yesterday’s market close data revealed that the 1-year forward price for business electricity dropped to £52.83/MWh, while its gas counterpart dropped to 69.18ppt. This can be seen in the graph below.
Latest Brent Crude Oil prices
Economic data was better than expected from the US and China, which helped Brent Crude edge up a little from its recent lows.
The focus for today turns to the EIA oil inventory report in the US. As well as this, political news in the Eurozone is still something to watch out for.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.