As a result of the unplanned outage at the Norwegian Troll field lasting longer than expected, total gas flows from Norway to Europe dropped yesterday - down 30 mm cm/day compared to last week's levels. High storage withdrawals were called upon to balance European systems as demand remained strong. We should see fundamentals staying almost unchanged today, with UK NTS demand expected to rise only slightly compared to yesterday. In terms of power, milder weather is expected to push consumption lower - particularly in France, which should lead to lower spot prices. On top of this, we may see an improvement in wind production in Germany.
How did the energy markets close?
NBP prompt gas saw support yesterday, as its widening premium to continental hubs was multiplied by the longer-than-expected outage of the large Norwegian Troll field. And while Day-Ahead rose 1ppt, closing at 69.2ppt, Front-Months saw a drop on the back of next week's milder weather forecast. Day-Ahead baseload power jumped to an 11-month high of £58/MWh last night - this was a result of wind speeds falling and exports to France rising after problems with the country's nuclear power stations. We saw a rise in seasonal power contracts at the start of the day yesterday - but this was short lived as they soon followed the direction of Brent and Carbon prices.
How did the energy markets open?
This morning, we saw Day-Ahead gas drop 1.45ppt on the back of the usual slump in Friday demand. Front-Months followed their recent bearish streak as a result of milder forecasts for next week. Prices on the far curve did fall slightly, however, but they remain relatively strong on the back of rising Brent. Day-Ahead power saw a huge drop this morning from its 11-month high; now standing at £51.70/MWh. This could be down to the two coal-fired power plants that went offline on Tuesday, which are expected to be up and running again today, with another plant restarting on Friday morning. S-13 prices also dropped, opening at £48.15/MWh on the back of weakened carbon allowances. This comes as the UK stated it would only support the withholding of a large volume of allowances from the third phase of the scheme, which means we aren't likely to see proposals to save the scheme approved soon.
1-year forward prices
After yesterday's rise, we have seen a drop in 1-year forward prices for commercial gas and power. View the graph below for more information.
Latest Brent Crude Oil price
We saw a continued rise in Brent 1st nearby prices yesterday - but prices didn't manage to break the $113.3/bbl mark, and WTI 1st nearby prices were down. Today, we can expect the market focus to be on the Eurozone PMI this morning, US economic data this afternoon and the EIA weekly report this evening. Overall, Brent shrugged off disappointing news, such as the IMF global growth outlook - and reached $113.5/bbl last night. News from Asia (which was weaker than expected) forced prices down to $112.8/bbl this morning. Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.