21st January 2013 | Posted by: Daniel Birkett | Market Analysis

Friday saw a strong increase in gas supply - which led to a considerably long UK system. On top of this, National Grid had to scale back all interruptible entry capacity at the Bacton terminal. We also saw a drop in both NBP spot and near curve prices. We're expecting UK NTS demand to be lower today compared to Friday. In addition, February 2013 prices could continue to fall as supply remains steady. In terms of power, spot prices dropped in most NWE European countries this morning (compared to last week's levels). For the coming few days, renewable output in Germany could be lower as temperatures are expected to fall.

How did the markets close on Friday?

Prompt prices were weaker at close on Friday after the NBP experienced a glut in supply. High flows from the continent resulted in a long system and Day-Ahead fell as it finished. Curve prices saw a rise as the hostage crisis in Algeria weighed in on Brent S-13, closing at 62.1ppt (pence per Therm). Power saw a fall following weak gas and carbon allowances. Predictions of heavy snowfall throughout the UK, coupled with cold temperatures, saw prices recover. Day-Ahead stayed strong at £54.00/MWh, while S-13 closed at £48.65/MWh.

How did the markets open?

Prompt gas dropped this morning, opening at 68.4ppt - which could be down to a recent LNG shipment and scheduled delivery at South Hook tomorrow. Looking towards the back of the curve, and we see S-13 has dropped to 61.75ppt, despite the rise in Brent to $111.86/bbl. Power's Day-Ahead shaved £1.65/MWh off its price as wind-fired and gas-fired generation made up the best part of overall power generation. Weaker carbon allowances and low-priced APi2 Front-Month coal led to S-13 opening lower at £48.30/MWh.

1-year forward prices

Friday's market close data revealed another fall in 1-year forward prices for commercial gas and power - despite the continued cold weather. This price drop is represented in the graph below.

Latest Brent Crude Oil price

We saw an increase in the Brent Crude price on Friday on the back of hopes that the US Congress would be able to come to an agreement on lifting the debt ceiling. Prices were also supported by stronger-than-expected Chinese economic data - mainly concerning implied oil demand. Figures on main commercial oil inventories in China (published by Xinhua news agency) could suggest a strong rise in Chinese implied oil demand in December. Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.