Energy Market Analysis – 22-08-2013 22nd August, 2013 Daniel Birkett
Nuclear and hydro generation is still limited which is having an effect on spot prices, although there are less coal and lignite-fired power plants offline than there were a few days ago which should restrict the gains somewhat.
In terms of gas, a stable outlook is expected for today as the return of the Norwegian Kollsnes plant has been countered by the temporary closure of some gas fields due to maintenance.
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 system was well-supplied yesterday thanks to increased flows via the South Hook terminal which led to bearish movement along the curve. Day-Ahead was the only contract to remain unchanged which was influenced by higher Brent prices.
The power curve mirrored gas with most contracts moving down except Day-Ahead which took direction from lower wind availability and numerous outages. The Pembroke gas-fired unit as well as three other facilities are to be taken offline today, while peak wind production is expected to be less than 1GW.
How did the energy markets open?
Gas contracts made gains this morning with Day-Ahead adding 0.25ppt to its price as a consequence of a short system. Flows via the Bacton BBL pipeline were at 0mcm while Holford withdrawals fell by 6mcm. Further along the curve, Front-Month climbed by 0.30ppt and Winter-13 rose by 0.20ppt following the announcement that the Rough facility will switch to single train-injection mode this week.
The power curve also saw most contracts open at a premium, Front-Month went up by £0.20/MWh and Winter-13 opened £0.25/MWh higher. Front-Month APi2 coal was a major influence on power contracts which added $0.95/tn to its price. Day-Ahead was the only contract not to turn bullish which lost £0.30/MWh thanks to the return of several units.
1-year forward prices
Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity went up – closing at 67.13ppt and £51.23/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 remained under $110/b yesterday and closed the session at $109.8/b while the WTI-Brent spread is beginning to look more balanced after reaching -$6/b yesterday. The on-going tensions in Egypt and Syria are still one of the main drivers of prices at present.