A drop in imports from Zeebrugge and higher demand led to a huge shortage in the UK gas system at the start of yesterday's session. This forced an increase in storage withdrawals in order to balance the system, which led to a jump in NBP prices (particularly Day-Ahead). We're expecting UK supply/balance demand to stay pretty much unchanged today, with demand still strong and storage withdrawals still heightened. As a result, March 2013 prices could rise once more. Power's spot OTC prices pushed higher yesterday across NWE countries on the back of lower temperatures and a fall in wind production in Germany. With warmer weather forecast from today onwards, spot prices should start to ease down a little. Despite this, temperatures are still expected to remain below seasonal average levels.
How did the energy markets close?
Thanks to yesterday's short system, Day-Ahead gas rose over 1.60ppt during the session. Front-Months pushed higher on the back of news that production at CATS riser platform would drop to zero for a few days next week. Power's Day-Ahead contract saw higher gains than anywhere else on the curve yesterday (up £1.05/MWh). Summer-13 prices joined its gas counterpart; rising to a 1-month high of £49.40/MWh.
How did the energy markets open?
With the exception of Day-Ahead, marginal gains were seen for the majority of NBP gas prices this morning. The gas system opened short but soon switched to long after flows from both Albrough and Hornsea helped it up by 26mcm. Day-Ahead power lost the gains it made yesterday, opening at £49.25/MWh as a result of slightly warmer temperature forecasts for the rest of this week. The rest of the curve saw mixed sentiment this morning.
1-year forward prices
As you can see in the graph below, the 1-year forward prices for business gas and business electricity have both experienced a rise.
Latest Brent Crude Oil prices
An optimistic outlook on financial markets along with a revision of EIA and OPEC forecasts forced Brent to close slightly higher. Today's focus points towards the IEA oil market report (which was out earlier this morning) and the EIA weekly report (which is due for release at 16:30). Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.