Energy Market Analysis – 15-02-2013 15th February, 2013 Nick Boyle
Despite yesterday’s lower demand, the drop in imports from the Continent and Norway allowed for a tighter UK gas system; this led to a rise in NBP spot prices. NBP ICE March 2013 saw an increase of 1.05% by close of business; finishing at 67.170ppt.
Today’s UK NTS gas demand is set to drop even more. However, as we can’t see the supply dropping by the same volume as it did yesterday, spot and near curve prices could lose strength.
In terms of power, we don’t expect to see as many tensions placed on spot markets in the coming week.
How did the energy markets close?
Gas prices dropped a little towards the end of yesterday’s session – with Day-Ahead falling 0.35ppt from its opening level. Despite this, March remained a strong runner, pushing up 0.25ppt. Meanwhile, levels have indicated that overall storage is one third higher from 2012’s levels.
There was mixed sentiment around power prices yesterday, as Day-Ahead rose £0.10/MWh and other contracts failing to register much change. Elsewhere, both coal-fired plants and Drax and Cottam restarted yesterday, but didn’t manage to influence prompt prices.
How did the energy markets open?
The interconnector jumped into action this morning, registering its highest flows of the month so far (approximately 24mcm). An increase in flows was also registered from Langeled (72mcm). Brent Crude seemed to weigh down curve prices this morning, with Front-Month dropping 0.40ppt and the rest of the curve soon following.
We saw some losses in the power markets this morning, with Front Month falling £0.25/MWh (possibly down to coal falling to $1.60/tn). Elsewhere, wind availability is still strong, despite being a little lower.
1-year forward prices
There has been a slight rise in the 1-year forward prices of business gas and business electricity. The rise, however, isn’t as notable as previous increases. You can view the changes in the graph below.
Latest Brent Crude Oil prices
Brent 1st nearby prices fell back a little at close yesterday, ending at $118/bbl. The April Brent contract almost retained stability, with the variation in the 1st-nearby prices only really showing the change of monthly reference from March to April.
GDP data from Japan (Q4) and in Europe knocked back global sentiment this morning, sending Brent Crude prices down to $117.25/bbl.
Focus now turns to US economic data and confidence indices (New-York Empire Manufacturing survey and the University of Michigan consumer confidence index). We’re also waiting for US industrial output data for January to be released.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.