1st December 2014 | Posted by: Daniel Birkett | Market Analysis

Spot power prices are at similar levels to last week but expected colder weather combined with weak wind generation should lead to a bullish afternoon session; although weaker fuel and gas prices should limit the gains. Gas prices moved higher on Friday due to a higher demand forecast for this week and an under-supplied system. Gas demand has increased today but still remains below the seasonal average and the UK gas system has opened long; as a result prices are set to fall over today's session. 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?

Near-curve gas prices displayed an increase on Friday due to an under-supplied system as a result of a drop in overall gas flows and higher demand. Bacton BBL flows were reduced while on-going outages in Norway also limited imports into the UK. Further along the curve prices took a different direction with a scheduled LNG delivery and weakening oil a factor. Most of the power curve followed falling gas which helped to weigh on most far-curve contracts and some nearby. However, Day-Ahead recorded a gain as a weak wind generation forecast, an expected rise in demand and various outages at power plants provided support.

How did the energy markets open?

The majority of the gas curve opened lower this morning thanks to a long UK gas system which helped to weigh on the Day-Ahead contract; shedding 0.50ppt from its price. Losses were also observed on the far-curve with weak Brent the main influence. Power contracts followed their gas counterparts closely and opened at a discount, however an increase in demand and a colder weather forecast helped to limit the gains. In terms of the Day-Ahead contract, stable fundamentals helped the prompt record a 1.30ppt loss.

1-year forward prices

Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity decreased - closing at 55.98ppt and £50.63/MWh, respectively. This can be seen in the graph below.  

 energy prices

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 have recorded another significant price-drop of over $3.60/b and currently trade at around $68.3/b this morning. Prices hit a 5-year low over the weekend, reaching their weakest price since October 2009 following the 2008 crisis. Extremely healthy supply levels and talks regarding OPEC output are the main market drivers.