Near-curve power prices continued to move down yesterday as the Ukrainian situation stabilised and commodity prices weakened. Prices could record a further loss today should fuel costs decrease again although a rebound in carbon contracts is a possibility. Gas prices were also pushed down by the eased tensions in Crimea with near-curve prices benefitting the most. Today UK LDZ demand is expected to fall to its lowest point in 2014 so far following a 17mcm decrease. The rest of the week should see temperatures remain 7 °C above the seasonal average in Europe although cooler weather is expected next week. Prices should continue their bearish trend today on the back of this healthy supply/ demand picture. 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?
Gas prices moved down yesterday with some contracts displaying a drop of up to 0.25ppt. Day-Ahead gas was the only contract to rise in price following a late rally in the afternoon due to a drop in flows, thus shortening the UK gas system. Prompt power prices made gains yesterday although bearish movement was observed further along the curve; Day-Ahead climbed £2.00/MWh higher. On the far-curve some contracts recorded losses of up to £0.20/MWh due to a mild weather forecast for the UK.
How did the energy markets open?
The UK gas system opened 13mcm short this morning which provided support to gas prices, although the gains were limited to a maximum of 0.25ppt. Langeled flows dropped below 70mcm and withdrawals via the Rough facility fell to 10mcm. Day-Ahead was the only contract to move lower, displaying a 0.15ppt loss despite the short system as the expected milder weather was the main driver of the contract. Power contracts showed similar movement to gas as most contracts opened at a premium. Day-Ahead power opened £2.25/MWh lower as wind generation levels are expected to improve significantly tomorrow. However a drop in carbon prices weighed on the far-curve which was also assisted by weaker Brent.
1-year forward prices
Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity climbed higher - closing at 62.38ppt and £49.95/MWh, respectively. This can be seen in the graph below.
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 fell by $1.54/b yesterday to revert back to the levels seen in February. Meanwhile WTI decreased by $1.88/b on the back of weaker oil demand, taking the Brent/WTI spread to below -$5/b.