Spot power prices have decreased today following the return of a large-scale coal plant in Holland, with further direction coming from a weaker gas market. The overall supply and demand outlook in Europe is generally healthy, with nuclear availability set to rise. Gas prices rallied higher yesterday as the Dutch government confirmed that production at the Groningen field would be capped at 30mcm. Prices have decreased today as short term supply is comfortable despite a slight drop in Dutch BBL flows; further bearish movement is expected this afternoon. Today's prices can also be found in an easy to read table on our 'current UK energy price' page.
How did the energy markets close?
Gas contracts moved down towards the end of yesterday's session following strong increases after the announcement of Dutch production cuts. Bearish pressure came from a number of scheduled LNG deliveries, although the UK gas system was under-supplied due to an increase in storage injections. The British Pound strengthened against the Euro with a 2-day ultimatum given to Greece in regards to the new debt proposal presented to them. This helped power contracts erase some of the morning's gains, with early upward pressure coming from a stronger gas market.
How did the energy markets open?
Gas prices have moved down due to healthy supply levels and losses were observed across the curve. The upward pressure provided by Dutch production cuts seems to have eased and a healthy LNG outlook has helped to weigh on the market. Power consumption is set to fall with warmer weather set to return to the UK as temperatures in London are expected to rise to around 25 °C, offsetting weak wind generation. Losses on the gas-curve also helped their power counterparts to move down, although stronger fuel and oil prices provided some resistance on the far-curve.
1-year forward prices
Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity decreased - closing at 45.88ppt and £44.20/MWh, respectively. This can be seen in the graph below.
Latest Brent Crude Price
Brent 1st-nearby prices have recorded a sizeable increase and have climbed back above $64.5/b as the forecast for US crude demand was stronger than expected and there are some doubts about reaching an agreement with Iranian officials in Vienna.