Energy Market Risk Analysis | mid July 2012

Uptrend breaks as Norway strike ends

UK power, along with other energy markets, continued to see prices gain in early July, helped by threats by striking Norwegian oil and gas workers to bring all Norwegian production to a halt. But the uptrend was quickly broken as the Norwegian government forced an end to the industrial action on July 10th, and production levels ramped up again.

Day-ahead prices, which had been pushed as high as £45.50/MWh on the back of strike-related gas supply concerns, have since come down as low £42/MWh, while £2/MWh has also been knocked off August and September levels – bringing them to around £41.5 and £42/MWh respectively.

 

Strike ends but oil keeps rising

Norway’s government ordered an end to the oil and gas workers strike on July 10th, just as the strikers, who had previously voted not to escalate industrial action, threatened to shut down all production. The Norwegian government said that a concern that Norway’s credibility as a gas supplier would be badly damaged was the main reason behind the intervention.

As soon as the strike ended prices across energy markets slipped – Day-ahead gas dropping by 4 p/th, and Annuals softening by 1 p/th, as oil prices also buckled.

 

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Energy price shift between 02 July 2012 and 17 July 2012

Elec: -0.84%

Gas: -0.8%

Coal: -0.51%

Oil: +7.13%
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