15th September 2016 | Posted by: Daniel Birkett | Market Analysis

Gas Power
Market Close Market Close
Losses on the oil market pressured down far-curve gas contracts yesterday afternoon but movement at the front of the curve was generally bullish. Norwegian exports into Europe decreased, while a cooler weather forecast for the rest of the week helped to push the prompt higher. Elsewhere, worries in regards to output at the Groningen facility was a point of discussion at a parliament meeting in Holland. Power contracts displayed gains across the curve on Wednesday with the Day-Ahead contract recording a huge increase of over 200% due to a weak supply picture, with the UK heavily relying on expensive gas and coal-fired generation. The upward movement filtered through to the rest of the curve, with a drop in oil contracts having little effect.
Market Open Market Open
Downward movement is evident across the gas curve this morning with a rise in Norwegian output helping to weigh on the prompt. The UK gas system remains long despite a drop in UKCS production as a result of an unplanned outage at the St-Fergus terminal. Demand levels are also higher due to cooler weather but this will be offset by the current oversupply and the outlook is stable. The power curve is attempting to correct yesterday's strong gains this morning, with the prompt recording a loss of over £140/MWh. The usual drop in industrial demand on Fridays, cooler temperatures and a slight rise in wind generation have all helped to apply downward pressure on the near-curve. Further out, contracts have followed the movement of their weakening gas counterparts.

Brent Summary

Brent 1st-nearby prices moved down yesterday following the release of the latest EIA report, erasing some of the morning's gains which continued from Tuesday's session; Brent currently trades just above $48/b.

1-year forward prices

Market close data has revealed that the 1-year forward price commercial gas decreased, while commercial electricity moved higher - closing at 36.98ppt and £43.20/MWh, respectively.

Click graph to enlarge

energy price graph - 15-09-2016

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