Energy Market Risk Analysis – early June 2012

Annuals hit 25-month low

The price downtrend seen in the first half of May continued briefly into the second half of the month, with UK Power Annuals falling to their lowest level since April 2010. But then the downwards momentum stopped. And for the last fortnight prices have been bouncing off these long–term lows.

October ’12 Annual has hit downwards resistance at £47.5/MWh, while April ’13 Annual has run aground around £49/MWh, as several markets appear to be taking a breather following a general two-month slide.

 

Downtrend falters

Prices have levelled off in recent days, after the sharp falls seen during the first three weeks of May. Reduced Norwegian flows and increased injections into storage have offset a significant drop in demand due to the warmer weather – propping up short-term prices, while longer term prices have been shored up in part by uneasiness over LNG supplies from next winter.

Day-ahead slipped as low as 52 p/th, as the hottest weather kicked in, but has since risen back as high as 55 p/th.

 

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Energy price shift between 16 May 2012 and 05 June 2012

Elec: -1.57%

Gas: -1.41%

Coal: -14.21%

Oil: -20.63%
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