Apollo Energy publishes a daily energy market analysis, focusing on the gas, power and oil markets including a commentary on how the markets close and open. Our analysis provides insight on how the markets are performing and also considers various factors which could dictate price changes in the future.
The analysis also contains a graph which tracks the one-year forward price of both gas and electricity as well as changes to Brent crude oil.
Weaker Norwegian flows and an increase in coal-fired power generation (on the back of higher cooling demand due to warm temperatures) lifted gas contracts on the near-curve yesterday. Elsewhere, there are no LNG deliveries scheduled to arrive in the UK until the 27th of July which resulted in a drop in send-outs, also offering further support to the curve.
The UK gas system remained short yesterday as an increase in gas-fired power generation and higher exports to Belgium lifted demand levels. Weaker UKCS and Norwegian flows also reduced supply levels, as did a drop in LNG send-outs; this helped towards gains on the near-curve. Further out, winter contracts displayed some decreases following strong upward movement on Friday.
Winter gas prices displayed a downward correction yesterday following Fridayâ€™s surge; last weekâ€™s increase was a result of Centricaâ€™s announcement regarding the long-term outage at the Rough storage facility. However, contracts on the near-curve moved higher as the UK gas system fell short due to a rise in exports, weaker Norwegian flows, a drop in UKCS output and lower LNG send-outs.
The offshore Rough gas field, the UKâ€™s largest storage facility will not inject gas until spring 2017, with a high possibility that it could remain offline until autumn that year.
Winter contracts displayed a significant increase on Friday as it was announced that the Rough storage facility will remain offline until March 2017 following a lengthy inspection. Rough accounts for 70% of the UKâ€™s storage capacity and the majority of the nationâ€™s back-up supply will now come in the form of more expensive imports from Europe. The lack of storage injections will result in a long system with surplus supply exported to Belgium via the IUK pipeline.