Weak demand resulted in a comfortable UK gas system yesterday, which was shown through the drop in storage withdrawals. A clear drop in prices, however, was avoided through the news that the outage on the Troll A platform would continue. UK fundamentals should remain steady today, with NTS demand up slightly compared to yesterday - which leads us to believe February 2013 will remain stable. A notable increase in wind outputs from Germany, coupled with wilder weather, pushed NWE power spot prices down yesterday - we even witnessed hourly prices below €10/MWh on the German market. Power prices have the potential to stay low for the rest of the week.
How did the energy markets close?
We saw prompt and Day-Ahead gas prices make slight gains yesterday, despite the forecasted milder weather and the news of the extension to the unexpected outage at Norway's Troll gas field. Day-Ahead power opened up yesterday's trading at a monthly low of £44.60/MWh, which was down to increased forecasted wind output and warmer weather. Far curve prices decoupled from a 'bullish' has market to remain sluggish.
How did the energy markets open?
On the back of falling demand (forced by milder weather and a well-supplied system), NBP gas prices opened bearishly this morning. Far curve prices weren't affected by the rise in Front-Month Brent, which was up to $113.40/bbl on an expected increase in US demand. A new monthly low of £43.50/MWh was seen for Day-Ahead baseload power this morning, which we can attribute to higher wind speeds and milder forecasted weather.
1-year forward prices
A slight increase was registered for both 1-year forward gas and power prices. You can see this rise in the graph below.
Latest Brent Crude Oil prices
A slight rise in Brent 1st nearby was seen yesterday - with supports now standing at $113, $112.4 then $111.5/bbl. This afternoon, our focus will be on US economic data (on home prices and consumer confidence), which could lead to a downturn in mood. This evening, the API report could provide further influence. Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.