Energy Market Analysis – 07-03-2013 7th March, 2013 Nick Boyle
Day-Ahead gas prices closed lower last night, while near curve prices remained strong amidst concern surrounding storage levels. April-13 prices also rose, closing up at 68.590ppt.
Today’s UK Local Distribution Zones demand was expected to be a little lower compared to yesterday.
Recent warm weather, which is expected to last until the weekend, will be met by a significant drop in temperature next week. Because of this, we expect week-ahead prices to remain strong in the short-term.
How did the energy markets close?
Yesterday’s bearish opening was soon quashed as Day-Ahead gas closed up at almost 75ppt; which could be due to low levels of storage availability.
Month-Ahead power has gained just £1.00/MWh since the start of March, which could be down to the cooler weather predictions for April. What’s more, the DOW Jones industrial average has crept up quite considerably since the start of the month, which has led to an increase in the demand for power.
How did the energy markets open?
On the prompt, we saw Day-Ahead gas climbing 1.10ppt day-on-day this morning. This could well be because of expected colder temperatures, which pushed the demand for domestic heating higher.
Power’s Day-Ahead increased by £0.25/MWh, opening trading at £53.50/MWh – held up by its gas counterpart. We also saw Front-Months adding value to their closing levels because of recent increases in industrial demand and forecasts of a colder start to spring. W-13 and W-14 have continued their ‘mirrored’ trend, both opening at £72.70/MWh this morning.
1-year forward prices
There was a slight drop recorded in both 1-year forward prices of business gas and business electricity – which are now trading at 69.03ppt and £52.76/MWh respectively. This drop, as usual, can be seen in the graph below.
Latest Brent Crude Oil prices
Brent Crude and WTI 1st-nearby prices fell a little yesterday on the back of US Energy Department data – which revealed a rise in inventories as Brent Output was still damaged by shutdown. The markets weren’t affected by the passing of Hugo Chavez.
The EIA report wasn’t as bearish as it could have been – revealing that total stocks were down by 2.4Mb. At the same time, Crude oil stocks saw a rise of 3.8Mb.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.