Energy Market Risk Analysis | Early August 2013

Weaker on demand drop, softer gas

The first two weeks in August have seen a weakening in short-term prices and a corresponding softening in longer-term prices. Day-ahead fell below £46/MWh, its lowest level since early July ─ as consumption levels dropped well below seasonal norms.
The return of nuclear reactors from maintenance has also provided price pressure despite relatively low levels of wind generation and robust short-term gas prices (due to maintenance concerns) providing some support.
Short-term weakness is being felt in the month contracts too, with September down by £1/MWh (2%) and October down by £1.5/MWh (3%)



Annuals ease on supply confidence

Annual gas contracts have moved lower since the start of August, indifferent to a rebound in oil prices and the fact that short-term gas prices have remained stubbornly high despite unseasonably low consumption levels.
Short-term gas prices have continued to be shored up largely by North Sea maintenance work, much of it in the Norwegian offshore. This has included an unplanned shutdown at the Heimdal platform, which curtailed flows through the Vesterled pipeline and into the UK, and the scheduled closure of the Kollsnes gas processing facility.


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Energy price shift between 01 August 2013 and 19 August 2013

Elec: -1.37%

Gas: -1.78%

Coal: -1.02%

Oil: +2.86%
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