Energy Market Risk Analysis – early July 2012

EU summit agreement spurs gains

Despite extending recent price losses in the third week of June – with October ’12 Annual, for example, reaching a fresh 26-month low – prices across the UK power and gas markets rebounded at the end of month.

Price gains across the seasons and Annuals were helped by a rally in oil and financial markets, as the EU summit ended with an agreement to support the banking sector and a EUR 120 billion programme to promote growth. October ’12 Annual, which had dropped as low as £46.3/MWh, was pulled up to almost £48/MWh as a result.

 

Sharp end-June price rally

October ’12 Annual prices gained almost 3% in a single day on June 29th, after EU leaders agreed a new package of measures intended to stimulate and support the European economy. The news triggered buying across global markets, including energy, with oil being one of the biggest gainers.

This came, however, only after UK gas prices had been pummelled to fresh long-term lows in the third week of June, with October ’12 Annual pushed beneath 60 p/th for the first time in 16 months. (It is now valued back above 61.5 p/th.)

 

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Energy price shift between 17 June 2012 and 02 July 2012

Elec: +0.97%

Gas: +0.39%

Coal: +1.43%

Oil: -1.03%
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