Energy Market Risk Analysis | mid December 2012

In the weak mid-winter…

UK gas and power prices ended 2012 on a downtrend – with most periods slipping back to early October levels as unseasonably mild weather reduced demand across western Europe.

April ’13 Annual UK power, for example, slipped beneath £51/MWh (having been discussed as high as £55.3/MWh and as low as £48/MWh over the last year), while Day-ahead slumped to £43.5/MWh – down from £50/MWh in mid-December.


US fiscal deal ends Christmas slump

A mild Christmas period pushed consumption well below seasonal norms and improved confidence about gas stocks and supplies for the rest of the winter. As a result prices eased across the board, with many periods close to three-month lows.

Although the market had been resisting the bullishness and $3/barrel gains seen on the oil market ahead of the US fiscal cliff deal, it was swept up in the wave of economic optimism and fresh oil price gains that greeted the actual confirmation of the deal, forward UK gas prices shunting higher as the New Year began.

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Energy price shift between 17 December 2012 and 02 January 2013

Elec: -0.43%

Gas: -0.62%

Coal: -1.75%

Oil: +3.33%
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