Spot power prices moved higher yesterday on the back of tightening supply as wind generation and nuclear availability remained low. Prices are expected to increase further this week but improved renewable generation on the continent should limit the gains. Eased tensions in Ukraine helped gas prices to close at a discount on Friday, while gas flows were also quite healthy. Norwegian exports are expected to be reduced tomorrow due to maintenance; however, the UK gas system has opened long today. The ceasefire in Ukraine was breached over the weekend which has increased the risk-premium in the area and prices are expected to climb higher as a result. 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?
Movement on the gas curve varied on Friday with contracts displaying minor changes in either direction. Day-Ahead fell by 0.10ppt, while Front-Month closed at a 0.30ppt premium in an indecisive day of trading. Elsewhere, seasonal contracts increased in price with Winter-14 rising by 0.30ppt. Power contracts also displayed mixed movement as seasonal contracts fell by as much as £0.60/MWh and Day-Ahead rose by £0.25/MWh. The prompt contract was influenced by 3 gas-fired generation plants which are currently under-going maintenance, with one of them only expected to return at the end of October.
How did the energy markets open?
The UK gas system opened 17mcm long at the start of trading although overall gas flows were 8mcm lower. Brent fell to around $100/b this morning as demand levels in China are forecast to be low over the next month. These two factors resulted in bearish pressure across the curve but a weaker British Pound helped most contracts stabilise. Wind generation is expected to retain its low levels of last week and coal-fired generation currently holds the biggest share of the fuel mix (34%). Carbon contracts are also showing signs of strengthening and provided further support to the bulls.
1-year forward prices
Market close data has revealed that the 1-year forward price for commercial gas moved slightly higher while commercial electricity held firm- closing at 57.65ppt and £50.70/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 remain below $101/b this morning following a bearish week of trading. Brent and WTI closed more than $1/b lower on Friday as tensions in Ukraine were seemingly calm.