|Gas contracts increased on Wednesday due to the expected rise in demand, with temperatures in the UK turning colder; gas demand increased by 10mcm yesterday. Residential heating demand was the main factor for this rise but a drop in wind generation also resulted in higher gas-fired power generation. Further out, another drop in oil prices helped to restrict some of the upward movement.
|The power market also displayed gains, taking direction from the colder weather forecast. Reduced wind generation also helped to support the prompt, combined with the higher demand outlook. These weaker renewable generation levels resulted in an increased reliance on expensive gas-fired generation.
|The UK gas system is 27mcm long this morning and above-average temperatures are expected to return later in the month, helping to weigh on gas contracts across the near-curve. Another strong drop in Brent has also weighed on contracts further along the curve in a bearish opening to the session.
|Near-curve power contracts have moved down this morning with weaker gas and a stronger wind generation forecast the main contributing factors. Wind generation is set to improve over the weekend with peak levels set to rise from 1.7GW to 3.4GW on Saturday, then reaching 4.6GW on Sunday.
Brent 1st-nearby prices have fallen further this morning, shedding around $2/b since yesterday's price to hit an eleven year low. A weak economy in China and on-going oversupply concerns continue to pressure down prices.
1-year forward prices
Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity decreased - closing at 33.18ppt and £36.51/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