Energy Market Analysis – 11-03-2013 11th March, 2013 Nick Boyle
Expected colder weather on Friday helped to support NBP gas Day-Ahead prices, while near curve prices dropped a little after an increase in storage injections eased worries about low reserves.
Today’s UK NTS gas demand is looking higher than estimated (75 mm cm higher than Friday’s level). What’s more, as storage withdrawals are now required to help balance the system, we should see a bullish trend for spot and near curve prices.
We’re expecting a clear jump in electricity consumption this week as temperatures plummet. This could impact market prices as the week goes on.
How did the energy markets close on Friday?
Gas’ Day-Ahead crept up over 2ppt on higher demand for the week – suggesting bullish sentiment on the front curve on Friday. There was little movement in NBP curve contracts, as market focus remained on volatility in the prompt contracts.
Power’s Day-Ahead slowly rose on Friday, reaching its gas counterpart at £54.80/MWh. Interestingly; the contract ignored the greater volume of French imports via the interconnector and higher wind availability over the weekend.
How did the energy markets open?
The gas system opened trading short this morning, as demand far outweighed increased European imports and withdrawals from Rough. NBP Within-Day spread stood at 3ppt, which helped Bacton Interconnector flows increase.
Elsewhere on the gas curve, prices followed the prompt and ignored oil prices.
Power’s seasonal contracts were higher this morning – as Front season opened over £51/MWh for the first time since April 2012. Day-Ahead power saw a similar trend to last Monday; gaining £5.50/MWh over the weekend.
1-year forward prices
Both 1-year forward prices for business gas and business electricity saw a rise on Friday – now trading at 69.40ppt and £53.08/MWh respectively. This can be seen in the graph below.
Latest Brent Crude Oil prices
Friday saw Brent Crude drop below $110/bbl for a short period of time ($109.14/bbl), but it soon recovered thanks to positive US jobs data.
The jobs data fuelled risk appetite on Friday, but less-than-favourable Chinese economic data seen over the weekend may have a negative impact on world oil markets this week.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.