11th October 2017 | Posted by: Stephen Berrey | Market Analysis

Gas  Power
Market Close Market Close
A rise in temperature forecasts for the remainder of October affected European gas prices on Tuesday. Short-term maturities posted the biggest losses and shrugged off an ongoing cut in Norwegian gas supply due to planned maintenance work. The UK system was heavily oversupplied throughout the session, leading to a plunge in NBP day-ahead prices. Spot prices inched a little down with bearish factors strengthening: milder temperatures and higher wind power generation levels but also an increase in lignite capacities in Germany. Nuclear capacities in France remain low but did not decrease further.
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A strong increase in wind power supply by the end of the week also played into losses at the front as gas demand from CCGTs is expected to decrease in line with heating demand. Despite weaker prompt prices, curve contracts were more resilient as uncertainty over French nuclear capacity and strong coal and oil prices provided support. Prospects of a jump in Norwegian gas exports following the end of the Kollsnes outage could weigh on prompt contracts today. We have a stable to bullish outlook for today with a potential for a continuous rebound in coal. CO2 prices are unlikely to correct down completely today, even if the coalition agreement of the Dutch government is bearish for emissions prices. After the trilogue negotiation tomorrow, we would expect CO2 prices to move down on profit taking, be there a compromise or not. This could contribute to a small decrease in power prices at the end of the week.

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

Brent Summary

Brent prices jumped 80 cents yesterday after American traders came back on their desks following a long week end due to Columbus day on Monday. Today, markets will be focusing on the two EIA and OPEC monthly reports before turning to weekly stocks figures tonight. High volatility could persist but we see prices moving range bound in the coming days.

1-year forward prices

Market close data has revealed that the 1-year forward price for commercial gas showed a small increase, and commercial electricity also followed with an increase – closing at 46.10ppt and £45.71/MWh, respectively.

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

Click to enlarge graph

Energy Price Graph - 11-10-2017

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