Energy Market Analysis – 23-01-2013 23rd January, 2013 Nick Boyle
With no real change on the fundamental gas picture yesterday, technical rebound pushed the European spot and near curve prices higher.
Today should see fundamentals staying more or less the same – with the UK NTS demand edging up slightly compared to yesterday’s level.
The main price driver should be the mild weather forecast for next week.
Regarding power, we are expecting spot prices to rise until the end of the weekend – with the weather expected to warm around then. The milder weather we are forecast for next week should ease pressure on price levels.
How did the markets close?
Gas markets saw NBP prices rise around 0.3ppt yesterday as Mar-13 Brent jumped to $112.4/bbl on the back of a positive global economic outlook. We saw Day-Ahead settle at 67.8ppt, which was down to a comfortably-supplied system.
Yesterday saw Day-Ahead power open at £1/MWh higher – this, however, failed to budge intra-day. Further out on the curve, contracts recouped losses made during the previous session. We also saw a rise of £0.25/MWh on Front Month amidst continued uncertainty surrounding the weather.
How did the markets open?
The gas system opened short this morning, but quickly picked up length at 5mcm long. Imports from Zeebrugge were lower as the NBP/Zeebrugge spread became negative. LNG sendout from Grain was greater than Milford Haven for the second day – with total sendouts at 41mcm.
Day-Ahead prices for power rose £2.20/MWh on the back of lower wind availability and below-average temperatures. Coal generation dropped 33GWh overnight, despite falls in the API2 Front Month contract.
EUA rose to €5.29/tn – seeing its largest rise since September.
1-year forward prices
Both the 1-year forward prices for commercial power and commercial gas have risen. You can see this rise in the graph below.
Latest Brent Crude Oil price
We saw a rise in Brent Crude prices yesterday, as the US markets ignored disappointment following the Bank of Japan’s move to focus on good US corporate results and the stronger ZEW.
It was also revealed that Crude output from China increased to a record level in December (17.94 Million tons).
As the US crude output continues to rise, we are expecting to see higher inventories when the API data is published later today.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.