Throughout Western Europe, temperatures are on their way down - which tends to support demand levels. Elsewhere, though, strong withdrawals, LNG send outs and a slight improvement in Norwegian exports to the UK are helping to keep the system relatively comfortable. We expect to see an increase in gas consumption until the start of next week. This morning's spot prices for power were reflective of the fall in wind production from Germany along with the return of colder weather.
How did the energy markets close?
Despite NBP gas prompt contracts opening up a little lower yesterday, gains were seen day-on-day after lower temperatures were forecasted. Day-Ahead closed the day up at 67.7ppt and far curve contracts were helped along by better macroeconomic sentiment, following equity and stock markets bouncing back alongside Crude. Far curve power contracts opened up bearish yesterday, as a result of a slump in oil and coal prices. However, Day-Ahead was encouraged up £0.20/MWh on the back of colder incoming weather and planned nuclear outages.
How did the energy markets open?
We saw more gains for Day-Ahead gas, as it opened at 67.95/ppt this morning. This could be down to the colder weather on the way or a small drop in Vesterled flows and zero LNG send outs. Far curve prices saw little change this morning, as rising oil was matched with worries of political uncertainty in Spain and Italy. Power jumped up £2.95/MWh, opening at £52.45/MWh this morning, as nuclear output is preparing for a fall. Elsewhere on the curve, far curve prices remained stagnant as 'bullish' wider fuels complex couldn't do anything to outweigh the unstable political atmosphere across Europe.
1-year forward prices
1-year forward prices for gas saw a very slight increase from yesterday's level, while business power remained at the same level. This can be seen in the graph below.
Latest Brent Crude Oil prices
The API report revealed that there was a 3.6 Mb rise in crude stocks, a 1.6 Mb rise in gasoline stocks and a 1.4 Mb drop in distillate stocks. Today's focus switches to German industrial orders at noon, the EIA weekly report at 16:30 ahead of the Bank of England and ECB meetings tomorrow. After we saw Brent end lower at the start of the week, it has now returned to its increasing streak and tested the March 2012 high of $117.32/bbl. Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.