18th February 2013 | Posted by: Daniel Birkett | Market Analysis

Friday saw lower demand and higher flows from the continent, which resulted in a comfortably-supplied UK system. This, in turn, pushed NBP spot and near curve prices lower - with March 2013 prices dropping by 1.40% at market close. UK NTS demand is predicted to be a little higher today compared to Friday. This, however, is undermined by the strong surge in Norwegian flows to the St Fergus terminal - which we expect will cause another weakening in March 2013 prices throughout the session. This drop, though, should be restricted somewhat with colder temperatures expected in the coming days. Power spot prices should be traded 'to the upside' for the start of the week - a move that can be attributed to the downward revision in temperatures over the weekend.

How did the energy markets close on Friday?

Towards the end of last week, the NBP gas curve softened slightly thanks to a comfortable system. Day-Ahead dropped 1ppt from its opening value and both front-months dropped 0.55ppt each. Power's Summer 13 fell £0.40/MWh to £49.20/MWh - following the bearish sentiment across the wider fuel picture. Front-Month Brent dropped to around $117.60/bbl, closing lower week-on-week for the first time since the beginning of the year.

How did the energy markets open?

Prompt gas contracts opened lower this morning, as Linepack started the day 50mcm long. Combined Norwegian imports from Langeled and St Fergus rose to over 93mcm. Elsewhere on the curve, there wasn't much movement as Brent retained its price below $118/bbl. On the power curve, all but Day-Ahead suffered a drop this morning as imports through the French and Dutch interconnectors reached 48GWh and nuclear generation secured 22% of total UK power generation. Day-Ahead's rise of £1.45/MWh can be put down to tomorrow's forecast of higher peak demand along with lower wind availability.

1-year forward prices

Based on Friday night's market close data, we saw a drop for both the 1-year forward prices for commercial gas and commercial electricity. This can be seen in the graph below.

Latest Brent Crude Oil prices

There was a sharp drop in Brent 1st-nearby prices on Friday (down to 116.28) as the US market opened. The price managed a recovery throughout the session and closed only a little lower than its opening level. US economic data came in quite supportive, but the market saw an initial sell-off after the news that industrial production had dropped. Today's focus surrounds political uncertainty in Italy, which could cause some downward pressure.