Energy Market Risk Analysis | early September 2012

Annuals zigzag sideways

UK Power Annual prices have moved slightly higher, then lower and then higher again over the last fortnight, in a directionally uncertain market – partly influenced by oil market oscillations, but also torn between the bullishness of supply threats (Belgian nuclear plant crack issues spreading and gas/LNG outages) and the bearishness of persistent economic gloom and low demand growth forecasts.

October ’12 Annual UK electricity prices have fluctuated in a £1.3/MWh range, between £48.7-£50/MWh (rising to the top of this range at the time of writing). October ’13 Annual and October ’14 Annual, meanwhile, have tracked these changes at steady premiums of around £4.25/MWh and £6.5MWh hours respectively.

 

Prices trip higher as September starts

UK Annual gas prices softened in the last week of August, only to rebound at the end of the month, in line with a mini flurry of buying on the oil market, which the UK gas market has been selectively following. Short-term prices, meanwhile, are decidedly firmer − as North Sea maintenance has constrained supply.

Day-ahead prices have bounced back from the mid-August trough of 51 p/th − to over 60 p/th at the time of writing − helped by a rash of outages at UK gas fields and terminals, as well as reduced flows from Norway, partly because of a ramp-up in maintenance Kollsnes gas processing facility – but also due to shut downs elsewhere, including unplanned maintenance at the St. Fergus terminal.

 

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Energy price shift between 19 August 2012 and 03 September 2012

Elec: +0.29%

Gas: +0.3%

Coal: +0.75%

Oil: -0.35%
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