Spot power prices are generally bearish this morning as expectations of a 'heat wave' in the UK has resulted in a below average demand forecast. Renewable generation remains low but this has had little effect on contracts with further downward pressure coming from a weaker gas market. Gas prices moved down on Friday despite the on-going outage at the Troll field in Norway, reducing imports into the UK. Instead direction came from healthy LNG supply and a warmer weather forecast. Weaker demand and ample supply levels have resulted in further losses this morning, with another decrease expected due to above average temperatures. 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 closed at a discount on Friday as the UK gas system was long throughout the session due to weaker demand and strong LNG supply. Norwegian flows were also set to rise today following the end of maintenance at the Troll gas field. Further downward pressure was provided by a significant rise in temperatures forecast for this week. Power contracts followed their gas counterparts and also moved down with this week's above average weather also a factor. Temperatures of 30 °C are expected in London this week, with an average of 26 °C expected for the rest of the month. Day-Ahead was the exception to the losses and received support from weak wind generation, resulting in a gain of £0.25/MWh.
How did the energy markets open?
Gas prices continue to fall this morning as a 'heat wave' is set to reduce demand levels considerably, with average consumption expected to be 175mcm this week, compared to 197mcm and 190mcm at the same point in previous years. Meanwhile, Norwegian flows have also ramped up and added to a healthy supply picture. Power prices have decreased this morning due to the expected fall in consumption this week. Weak renewable generation has restricted some of the losses on the near-curve, while another drop in oil has weighed 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 45.33ppt and £43.93/MWh, respectively. This can be seen in the graph below. Note: Brent Crude prices are taken from opening market data, and do not represent the price as it changes throughout the day.
Latest Brent Crude Price
Brent 1st-nearby prices recorded a loss of around $1.5/b over the weekend as lenders have refused to extend the Greek bail-out following an ultimatum last week; this resulted in the Euro hitting its lowest value in nearly a month.