Energy Market Analysis – 19-12-2013 19th December, 2013 Daniel Birkett
Spot prices fell slightly yesterday on the back of improved wind generation levels. Wind production is expected to remain healthy in the coming days, while milder temperatures will also help prices stay stable to bearish.
Gas prices also decreased yesterday due to lower demand and stronger flows from Norway. Today UK LDZ demand has risen by 15mcm but is till 2.5% below the seasonal average. In other news Langeled flows are close to 100%, Theddlethorpe has resumed output and LNG send-outs have increased which has led to an over-supplied system; prices should fall as a result.
Today’s prices can also be found in an easy to read table on our ‘current UK energy price’ page.
How did the energy markets close?
The gas curve closed with a series of losses yesterday with Day-Ahead decreasing by 0.55ppt and Front-Month closing at a 0.70ppt discount. The Rough facility increased its output to 24mcm, while interconnector flows fell to 0mcm. Linepack was long at the start of the session but became balanced around midday.
Power contracts also fell as Day-Ahead closed £0.40/MWh down as a consequence of a higher wind availability forecast and continued mild temperatures. Quarterly and seasonal contracts were the exception to the bearish movement as they posted small gains.
How did the energy markets open?
Day-Ahead gas opened 0.35ppt lower as most gas contracts registered losses due to a long system, above average temperatures and increased flows via the Bacton interconnector. The Holford and Theddlethorpe facilities are both in withdrawal mode and storage levels stand at 86%.
On the power curve, prices took influence from gas and opened at a discount with Day-Ahead falling by £1.20/MWh as wind generation is expected to be above 6GW. The losses ranged from £0.10/MWh for Q1-14 to £0.55/MWh for Feb-14. Front-Month APi2 coal fell by a further $1.00/tn as concerns regarding Columbian supply continue.
1-year forward prices
Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity decreased – closing at 68.10ppt and £53.13/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 Prices
Brent 1st-nearby prices climbed $1.19/b higher yesterday on the back of US stock figures and tensions in Sudan. Prices remain above $109/b while WTI gained $0.58/b yesterday taking the Brent/ WTI spread to -$11.2/b this morning.