22nd March 2017 | Posted by: Daniel Birkett | Market Analysis

Gas Power
Market Close Market Close
Gas prices moved higher on Tuesday as a result of a higher demand forecast for the next few days and an unplanned outage in Norway which restricted supply. Residential demand in the UK rose by 30mcm, with a drop in wind output also leading to a rise in CCGT generation. Meanwhile, bullish movement further along the curve was slightly restricted by weaker coal and oil contracts. Gains could be seen across the power curve yesterday with rising gas contracts and stronger demand offering support. A drop in oil and coal helped to limit the bullish movement on the far-curve but a short term drop in wind generation helped to lift the prompt.
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The outage at the Kollsnes processing plant has been resolved and Norwegian flows have reverted back to their pre-outage levels, resulting in a long UK gas system. Furthermore, temperatures are forecast to climb higher as we head into the weekend which will lower residential demand, while coal and oil markets display further decreases. These bearish fundamentals have led to price-drops across the gas curve this morning. Power contracts have moved down this morning, tracking the movement of gas. Milder weather is expected next month, with temperatures forecast to be above or around the seasonal average. Healthy wind levels are also expected next week, while fuel contracts have weakened, weighing on the far-curve.

For a breakdown of the current generation mix visit our Power Generation Insights page.

Brent Summary

Brent 1st-nearby prices display a loss this morning on the back of bearish API figures, an announcement in Russia also didn’t rule out a possible extension to the OPEC agreement, providing further downward pressure.

1-year forward prices

Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity decreased – closing at 42.52ppt and £42.71/MWh, respectively.

Today’s prices can also be found in an easy to read table on our ‘current UK energy price' page.

Click graph to enlarge

energy price graph - 22-03-2017

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