21st February 2013 |
Sarah Cooper |
We saw higher demand throughout yesterday's session, which led to a tightening in the UK's gas system; pushing NBP spot and near curve prices higher. Further pressure was applied to near curve prices following the drop in the GBP against the EUR.
There could be continued support for NBP Day-Ahead prices today, with a further rise in UK NTS demand (+15 mm cm). At the same time, March 2013 could continue to see gains from the weakness in the GBP.
As temperatures fall, electricity demand is going up - and we could only see weather return to 'normal' towards the back end of next week. This demand level could explain the strength we're seeing in the spot market at the moment.
How did the energy markets close?
Gas' prompt was pushed higher yesterday following the expected maintenance at the North Sea CATS Riser platform. This platform is now on a planned outage between 21st and 23rd February, which means 7mcm will be withheld from the system. At close, Front-Month rose to 0.5ppt as LNG send-outs remained low and just 2 cargoes were expected to arrive at Milford Haven over the next week.
Power's Day-Ahead made a recovery during yesterday's session; rising over £1.00/MWh. This could have been down to lower wind availability and higher peak demand forecasted for today. Overall, power contracts performed better than their gas counterparts throughout the session.
How did the energy markets open?
Despite the system opening long and an increase in withdrawals from Aldbrough, colder weather and higher demand meant gas prompt prices remained bullish.
Elsewhere, Within-Day prices rose over 1ppt to 68.4ppt and NBP prices remained strong despite a potential increase in Brent output from Saudi Arabia.
The power curve displayed mixed sentiment this morning. Wind Generation moved from 3% to occupy 6% of the UK's generation mix - which pressured Day-Ahead down to £51.25/MWh. Going the opposite way, Apr-13 and May-13 rose £0.25/MWh while Mar-13 showed small gains of £0.10/MWh.
1-year forward prices
Last night's market close data has revealed a slight rise in 1-year forward prices for business gas and business electricity. These commodities are now trading at 67.73ppt and £51.93 respectively. The graph below shows this change.
Latest Brent Crude Oil prices
Brent 1st-nearby suffered a big drop yesterday, falling to $115.02/bbl. Things aren't looking much better today either, with prices already at a new low of $114.49/bbl this morning.
The sharp downfall in the market could be down to several factors - namely the talk of an increase in production in Saudi Arabia, the strong rally seen in the USD and rumours of a fund having to bail out of its position.
Last night's API report revealed that crude stocks rose more than expected while distillate and gasoline stocks fell a little.
Today's focus turns to Eurozone PMIs then several economic reports from the US. This evening, look out for the EIA weekly report, as uncertainty surrounding Italy could still push sentiment down.
Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.