Energy Market Analysis – 11-07-2013 11th July, 2013 Daniel Birkett
Reduced nuclear supply in the next couple of days should see spot prices remain firm with improved lignite production offsetting the lower nuclear availability. Wind generation is forecast to be high on Sunday which should see a price drop over the weekend.
The UK gas system tightened yesterday due to mixed flows via the BBL pipeline and NBP prices were supported as a result.
How did the energy markets close?
Prompt contracts added to their price as flows via the St Fergus terminal were around 10mcm and 0mcm at the BBL pipeline. August-13 went up to close at 65.8ppt and September-13 also added to its price to end the session at 65.35ppt, as storage levels remain around 60%. Further along the curve most contracts made a small loss in a quiet day of trading.
Day-Ahead power went up by £0.30/MWh to close at £50.55/MWh which is around £10/MWh higher than its price this time last year. Two nuclear plants at Dungeness remain offline and are only expected to return next week which added to the bullish sentiment on the power curve.
How did the energy markets open?
The gas curve made further gains this morning on the back of stronger Brent prices which hit $108.7/bbl as Libyan production fell by almost 15%. The system opened 10mcm short with BBL pipeline flows still at 0mcm and Langeled flows are at 23mcm; Day-Ahead climbed 0.25ppt.
Most power contracts went up except Day-Ahead which lost around £1/MWh as temperatures continue to be warmer than average for this time of year. The power generation mix only saw minor changes and nuclear availability in Germany was at its highest level for 5 years.
1-year forward prices
Market close data has revealed that the 1-year forward price for commercial gas went up while commercial electricity made a small loss – closing at 68.73ppt and £52.00/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 saw further gains and hit a high of $109/b last night due to a large decrease in US crude inventories. Risk appetite also grew following a speech from the Chairman of the US Federal Reserve which also helped prices increase.