Energy Market Risk Analysis | late July 2013

Limbo Continues

With prices continuing to tread water over the last two weeks, July ended up being one of the flattest months ever for UK power, particularly on the Annuals. Softening oil, coal and Continental power markets were largely ignored as a tightening outlook for short-term UK gas supplies helped bolster sentiment on the UK power market too.
Persistently low levels of wind generation, delays to the restart of nuclear generation following maintenance and strong demand for cooling also lent support to short-term electricity prices, nudging Day-ahead up to £50.65/MWh at one stage, its highest level for sometime.



Day-ahead rises despite weak demand

Short-term prices have edged higher as the main summer maintenance period gets underway, despite demand dropping for extended periods to almost 40% below the seasonal norm (and weekend demand reportedly reaching its lowest level in at least 11 years). Meanwhile longer term levels have again held broadly stable − talk of improved winter supplies and softer oil prices being tempered by the current physical supply tightness.
UK gas production has dropped off in the face of outages at several fields and terminals, including the Teesside BP, Dimlington and Bacton Seal terminals, while further significant outages in infrastructure are planned in the short term future.


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Energy price shift between 16 July 2013 and 01 August 2013

Elec: +0.39%

Gas: +0.39%

Coal: -1.54%

Oil: -0.93%
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