Energy Market Analysis – 22-02-2013 22nd February, 2013 Nick Boyle
Yesterday saw a higher level of demand than the industry expected. This, coupled with lower pipeline flows from St. Fergus Total and Teesside, led to a sharp upturn in storage withdrawals. As you can expect, this helped NBP spot and near curve prices push higher.
We should see another rise in UK NTS gas demand today; with storage withdrawals already up this morning. This should contribute to a spike in spot and near curve prices.
Temperatures have been around 6 degrees colder than seasonal levels, which has been supporting the high levels of electricity consumption.
How did the energy markets close?
Gains were seen for Day-Ahead and Front-Month gas yesterday (climbing 0.6ppt and 0.3ppt respectively). Prices out on the far curve saw small gains yesterday on the back of a bullish prompt – however, the significant drop in Brent prevented any further gains.
Power’s Front-Month and April-13 pushed higher by around £0.40/MWh during yesterday’s session – this rise coming on the back of lower wind output and cooler weather. Out on the far curve, gains were made on the back of rising carbon allowances, with S-13 and W-13 both adding £0.20/MWh to their opening levels.
How did the energy markets open?
Day-Ahead gas jumped 1.15ppt, opening the trading at 69.75ppt on the back of forecasted colder weather. Further out, S-13 and W-13 both added around 0.3ppt to open at their highest levels since early December.
Power’s Day-Ahead also saw a rise this morning; climbing £1.70/MWh. Front-Month secured a new high for February, hitting £49.15/MWh this morning on the back of gas supply concerns.
1-year forward prices
The 1-year forward prices for business gas and business electricity registered a slight rise – with gas now trading at 67.78ppt and electricity up to £52.13/MWh. This rise is represented in the graph below.
Latest Brent Crude Oil prices
Brent 1st-nearby prices continued their free-fall yesterday, reaching a low of $113.32/bbl. This can, on the whole, be attributed to the rally in the USD. What’s more, strong production from Saudi Arabia also pushed harder on the prices.
We aren’t expecting anything out of the ordinary from the IFO survey today, while European Commission forecasts could lead to pressure on France.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.