Energy Market Analysis – 28-01-2013 28th January, 2013 Nick Boyle
News broke on Friday that the outage at the Norwegian Troll field would last until 1st April (instead of 4th February) – which supported European spot and near curve prices. NBP ICE February 2013 prices rose by 2.01% at close.
UK NTS demand is expected to be 87 mm cm lower compared to Friday’s figure with the system sitting quite comfortably. After Friday’s increase, profit taking could force February 2013 prices slightly lower today.
We expect spot prices for power to be down until mid-week when temperatures will be the mildest.
How did the energy markets close on Friday?
On Friday, gains were seen for Front Month contracts and Day-Ahead after news that the Norwegian Troll outage would last until April. The UK system was balanced for the best part of the day, but fell short later on, which led to a late rally in Within-Day.
Power’s Day-Ahead fell over £4/MWh on Friday, which could be down to warmer-than-average temperature forecasts for this week. Seasonal contracts were restricted as a result of losses in carbon credits – with Sum13 closing just £0.35/MWh higher.
How did the energy markets open?
Other than Day-Ahead gas prices, NBP experienced slight gains this morning. Linepack opening 22mcm long, which led to Within-Day falling to 66.75ppt, and lower LNG sendouts from Milford Haven were seen as it awaits the delivery of 2 cargos later this week.
In terms of power, the Day-Ahead spark spread continued its negative trend, which led to a fall in CCGT generation (31% on Friday to 16% of total UK power this morning). An increase in wind generation picked up lost ground as Day-Ahead dropped £2.60/MWh.
1-year forward prices
Following Friday’s market close data, we saw a rise in 1-year forward prices for both commercial gas and commercial electricity. This rise is displayed in the graph below.
Latest Brent Crude Oil prices
We saw Brent 1st nearby closing flat on Friday after reaching a new high of $113.84 intraday. The rise was down to European banks repaying emergency funds to the ECB – but the hindrance came when disappointing figures on US home sales were published.
Today, we turn our attention to Euro area M3 data followed by US durable goods orders; which could provide some support.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.