Strong gas demand on Friday along with lower pipeline flows meant the UK system remained tight. As a result of this, high storage withdrawals were required to keep things balanced. NBP spot and near curve prices were pushed higher before a late reversal after a sell-off. UK fundamentals should remain pretty much unchanged today - and we're expecting demand to remain strong. What's more, with news of colder weather for most of February, March 2013 prices could be on the upside over the next few days. Spot power markets seems to have support until Wednesday - as a result of the recent colder weather, limited wind production and lower solar production in Germany. On top of this, nuclear availability in France remains limited because of the recent unplanned outages. We may well see spot prices drop from Wednesday, as temperatures warm a little (before another expected cold snap).
How did the energy markets close on Friday?
Front-Month gas dropped on Friday, closing at 65.85ppt on the back of heavy selling. Out on the far curve, S-13 closed up a little at 64ppt. Following weather forecasts for the rest of February showing lower-than-normal temperatures, we're expecting prompt prices to be supported for the month. Day-Ahead power closed up at £52/MWh, with a rise in gas and low wind forecasts being the catalyst here. Elsewhere, Front-Quarter added £0.75/MWh to its opening level; closing the day at £49.75/MWh. This rise could be down to increasing political tension in Iran, pushing Brent prices up towards $120/bbl.
How did the energy markets open?
NBP gas opened bearishly this morning, despite Norwegian gas output being reduced by 12.7mcm after a fire at a processing plant over the weekend. Day-Ahead fell to 67ppt, which could be down to an increase in flows through the interconnector. Power's Day-Ahead dropped to £51.30/MWh as a result of increased wind availability. Elsewhere on the curve, despite a rise in wider fuels complex prices, the overall outlook was bearish.
1-year forward prices
Friday's market close data has shown a rise in prices for both 1-year forward business gas and electricity. This rise is displayed in the graph below.
Latest Brent Crude Oil prices
We saw a new 2013 high for Brent 1st nearby on Friday, as prices soared to $119.17 during the session. This rise can be attributed to strong economic data from China and the US. Today's focus will be on the Euroilstock inventory report (which looks at European oil inventories in January). Elsewhere, the Chinese New Year holiday will quieten the market for the day.