Energy Market Risk Analysis | mid November 2012

Steady; market braces for more cold

While different UK power periods have seen prices shuffle up and down to varying degrees over the last two weeks, the overriding trend has been one of price stability.

Annual prices, for example, continue to hover in the price channel that has established itself since mid-August – with April ’13 Annual around £52/MWh, October ’13 just above £53/MWh and April ’14 Annual around £54/MWh. None has moved more than 50p in value since the middle of last month. Relative stability in adjacent markets has underpinned the calm.

 

Supplies rise but demand does too

There has been a little more volatility on the UK gas market than on the UK power market, but not much. As the second half of November got underway general prices edged up, in the face of continued supply tightness and escalating conflict between Israel and Gaza. Then, as a ceasefire was announced and appeared to hold and the supply outlook improved with several outages in the North Sea ending, prices eased – only to rally again as December started, bringing with it freezing weather and forecasts of more to come, alongside further Middle East tensions.

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Energy price shift between 15 November 2012 and 03 December 2012

Elec: -0.18%

Gas: %

Coal: +0.72%

Oil: +2.34%
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