Yesterday's demand was greater than expected - which helped to push European spot and near curve prices a little higher. Colder weather should continue to support gas demand across Europe today, and higher storage withdrawals are likely to be needed to balance the gas system. All of the above should lend further support to April 2013 prices. With temperatures still falling - and expected to reach their lowest level on Thursday - electricity consumption is likely to increase over the next few days. At the same time, German wind power generation is set to fall close to zero. As a result of these factors, power's spot prices could well rise.
How did the energy markets close?
Day-Ahead gas made considerable gains during trading yesterday, closing up more than 5.00ppt from its opening level. Similar movements were recorded for the rest of the prompt. The surge was attributed mainly to cold weather and supply concerns - with the system staying short all day because of several unexpected outages. We saw similar gains in power's prompt - with the Day-Ahead contract rising almost £1.00/MWh during the day. Elsewhere on the curve, mixed sentiment was afoot - as prices were torn between rising gas and weakening carbon and coal prices.
How did the energy markets open?
Further gains were seen early on today as Day-Ahead gas opened above 93ppt - with demand still far outweighing supply. Bullish sentiment seen on the far curve saw the seasonal contracts failing to take direction; despite falling Brent Crude. After nuclear generation increased and wind generation dropped, we saw Day-Ahead power climb to a high of £66.50/MWh - a level we haven't seen since February 2012.
1-year forward prices
Another rise was registered for 1-year forward business gas and power prices yesterday - moving up to 69.90ppt and £53.30 respectively. This rise can be seen in the graph below.
Latest Brent Crude Oil prices
Downward pressure was felt as a result of weak Chinese economic data, but US markets remained optimistic. We aren't certain how long this market optimism will last. Elsewhere, Saudi Arabia Crude is expected to ramp up its output over the next few months. Today's focus will bear down on the weak Chinese data as well as the political atmosphere in Italy. Downward pressure is expected from a debate about US fiscal policy. In terms of reports, the EIA and OPEC monthly reports are due; as is the API weekly report. If relevant, these will be discussed in tomorrow's energy market analysis.