Energy Market Risk Analysis – mid January 2012

Cold, Iran tensions provide limited lift

A cold snap and concerns over Iranian threats to close a key LNG (liquefied natural gas) supply route stimulated a cross-market rally in UK power and gas prices in the second week of January, although this proved be short-lived and prices have since fallen back.

April Annual ’12 has now dropped beneath £44.5/MWh, a new 21-month low, while other Annuals are also at fresh long-term lows. April Annual ’12 has now lost £10/MWh, or 18%, in value over the last three months alone.

UK gas prices are lower again, despite ratcheting higher in the second week of January as LNG supply fears washed through the market and freezing weather boosted gas demand.

April Annual ’12 is now discussed beneath 58 p/th, its lowest level in more than a year, having reached a high of almost 61 p/th in recent days, while other Annuals are also lower but by smaller amounts, as inter-Annual differentials have pushed yet wider.

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Energy price shift between 03 January 2012 and 16 January 2012

Elec: -1.73%

Gas: -1.88%

Coal: -4.34%

Oil: +0.98%
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