Energy Market Risk Analysis | early May 2013

Downtrend judders to a halt

After distinctly bearish April, UK power prices have hit much choppier waters since the start of May – both short and long term markets experiencing some volatility, as supply issues and some strength in the oil and carbon markets have helped stem the recent underlying downtrend.
A combination of high levels of nuclear and wind generation, weaker gas prices, higher temperatures and softer demand in the second week of May had started to pull short-term (Day-ahead) UK power prices down to their lowest level since January – just above £45/MWh.



Flat Annuals seek oil price steer

Although short-term UK gas prices edged lower over the first 10 days of May, helped by warmer weather softening demand, they have since reared higher, amid colder weather and concerns over Norwegian supplies dropping as outage programmes intensify. Longer term prices meanwhile have levelled off and appear to be sticking again in the long-standing price range that established itself in the second half of 2012, before the late Winter mini-bubble got underway.



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Energy price shift between 18 April 2013 and 16 May 2013

Elec: -3.77%

Gas: -2.67%

Coal: -3.71%

Oil: +2.41%
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