6th June 2017 | Posted by: Daniel Birkett | Market Analysis

Gas Power
Market Close Market Close
Gas contracts were pushed higher by a rise in coal prices yesterday afternoon, with gas-fired power generation looking a more favourable source over the summer months, while nuclear availability remains low. The UK gas system was long, which led to losses at the start of the session, with further bearish resistance provided by a stronger Pound and a falling oil market. Rising coal helped power contracts to close at a premium on Monday, with news regarding Qatar also a supportive factor. A drop in temperatures reduced cooling demand compared to last week and wind levels were high, resulting in some losses in the morning.
Market Open Market Open
Issues in the Middle East regarding a number of Arab nations and Qatar continue to affect fuel markets this morning. Qatar is a major LNG exporter, providing 30% of global LNG supply during 2016 and any disruptions could have a significant impact on prices. In terms of UK supply, strong wind levels have reduced CCGT demand and the system is oversupplied, resulting in losses across the near-curve. Meanwhile, the oil market remains bearish but further upward movement on the coal market cannot be ruled out. Power prices are little changed from yesterday’s close, displaying minor losses across the curve with the exception of August-17. Strong wind generation has offset a drop in solar power this week, although next week’s forecast is a complete contrast, with healthy solar and weak wind expected. Movement further along the curve is minimal as a bullish coal market has restricted any downward movement.

For a breakdown of the current generation mix visit our Power Generation Insights page.

Brent Summary

Brent 1st-nearby prices display further losses and trade at $49.25/b this morning following a 6th consecutive bearish session. A number of Arab states have cut ties with Qatar due to links with terrorism, creating further volatility, while strong US output continues to weigh on the market.

1-year forward prices

Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity decreased – closing at 43.08ppt and £43.04/MWh, respectively.

Today’s prices can also be found in an easy to read table on our ‘current UK energy price' page.

Click graph to enlarge

energy price graph - 06-06-2017