While the demand for gas continued to increase yesterday, the drop in domestic production in the UK combined with a drop in Norwegian flows led to a tightened UK gas system. This resulted in high storage withdrawals to balance the system. Cold weather is expected to support European gas demand and prices today.
How did the energy markets close?
After demand for gas increased with the cold weather, gas prices ended up closing quite bullish yesterday. Far curve prices were held back by weaker Brent, which made it to the $110/bbl mark. The prices of power increased after a fall in forecasted wind generation, reaching a three-month high of £54.55/MWh. Despite this, seasonal contracts dropped after weak carbon allowance prices.
How did the energy markets open?
Following severe weather warnings of ice and snow throughout the UK, gas prices headed skywards this morning. Day-Ahead gas opened the morning at 72ppt - an increase of 2.55ppt day-on-day. Falling temperatures were balanced out by an increase in forecasted wind production - which meant Day-Ahead power stayed strong. There was, however, an increase of £0.50/MWh for Front-Month, while far curve prices only rose slightly as Carbon prices fell further.
1-year forward prices
Following yesterday's market close, the latest 1-year forward prices for commercial power and commercial gas have stayed the same.
Latest Brent Crude Oil price
The price of Brent Crude had a busy day yesterday, reaching a high of $110.30/bbl, before dropping in the late evening by around $1 to $109.90/bbl. This drop can be accredited to the move to the March 2013 contract this morning. No huge changes are expected today, as the market is waiting for economic data from China and the IEA report, which will be released tomorrow. Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.