8th October 2014 | Posted by: Daniel Birkett | Market Analysis

Spot power prices moved down yesterday on the back of a warmer weather forecast for October but a short UK gas system restricted the losses. A healthy wind generation forecast for today and tomorrow should result in further price-drops this afternoon. Gas prices followed a downward trend yesterday as overall gas flows were higher and mild weather on the continent was also a factor. Today, gas flows remain strong with Norwegian output continuing to improve. Although a slight uptick in prices occurred this morning the general outlook is bearish. 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?

Improved Norwegian imports into the UK helped Day-Ahead gas move down yesterday, ending the session at 47.80ppt. The mild weather forecast remained the main driver of the gas market with most contracts posting small losses. Movement on the curve was generally subdued due to a lack of news in regards to Russian supply via Ukraine. Power prices continued to display bearish movement on Tuesday due to the mild weather forecast, with above average temperatures expected for October. Despite this, Day-Ahead managed to climb higher as peak UK demand levels were expected to hit 44.2GW today; a short UK gas system also provided upward pressure.

How did the energy markets open?

The majority of gas contracts climbed higher this morning and ignored weakening Brent which is continuing to hit record lows. Day-Ahead also posted a gain but healthy Norwegian supply managed to limit the upward movement; with Langeled output around 64mcm. The UK gas system was close to balance and storage levels were above 99% with LNG send-outs rising to 14mcm. Day-Ahead power was the exception to a bullish morning session and posted a loss with influence coming from stronger wind generation; a peak of over 3.2GW was expected for today. The rest of the curve moved marginally higher with rising coal prices a factor.

1-year forward prices

Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity displayed a loss - closing at 58.20ppt and £51.70/MWh, respectively. This can be seen in the graph below.

  energy prices

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 recorded a loss of $1.56/b and currently trade just above $91/b; healthy supply and a weak demand picture continues to be the main factor for this downward trend.