Energy Market Analysis – 06-06-2013 6th June, 2013 Daniel Birkett
Spot prices were down today due to the warm weather and higher renewable and nuclear generation in Germany. The temperatures are expected to stay above the seasonal average for the time being with no indication of changing in the next few days. Lignite production in Germany and nuclear availability in France is expected to go up, however solar generation has been revised down which should lead to a stable market.
How did the energy markets close?
The biggest movement on the gas curve was the Day-Ahead contract which fell by 0.70ppt as a result of healthy supply and warm temperatures. Front-Month closed 0.15ppt down and most of the losses seen on the rest of the curve ranged between 0.20ppt and 0.30ppt.
The Power curve was also bearish and the majority of contracts saw a decrease in price, Day-Ahead made a £0.15MWh discount while Front-Month saw no change. Further along the curve Winter-14 dropped by £0.05MWh and Summer-14 & Winter-15 both closed the session £0.35/MWh down.
How did the energy markets open?
The gas curve saw further bearish movement with Day-Ahead decreasing by 0.80ppt and Front-Month dropping by 0.55ppt , the warm weather forecast and healthy supply levels playing a part. Interconnector flows fell to 9mcm and storage withdrawals led to a slight decrease in gas flows.
The power curve took more direction from APi2 prices which are becoming more stable rather than Brent prices which made a loss. Prompt prices were bearish however and Day-Ahead made a large drop of £1.80/MWh.
1-year forward prices
Market close data has revealed that the 1-year forward price for both commercial gas and commercial electricity fell sharply –both closing at 67.13ppt and £51.10/MWh, respectively. This can be seen in the graph below.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.
Latest Brent Crude Oil prices
Brent 1st nearby prices rose to 104.7 $/b then fell towards the end of the session to close at 103.04 $/b and equity markets also made a significant drop. Total stocks decreased by 1.2Mb and Crude stocks fell more than anticipated by the recent API reports, falling 6.3Mb.