Energy Market Risk Analysis | mid January 2013

CO2 crash offsets gas and oil gains

A collapse in the price of CO2 emissions allowances (EUAs) has counteracted the effect of firmer oil and gas markets on UK power prices over the last two weeks, leaving Annuals stable to marginally higher than where they were in mid-January.

On the short-term market, the end of the mid-January freeze brought Day-ahead prices back down to below £44/MWh, from £55/MWh, with high wind power output contributing. (UK wind output records have been broken a couple of times in recent days, with the latest record set on the weekend, as for the first time more than 5,000 MW of electricity was produced from wind – during the half hour period between 11:00 and 11:30 a.m.)

 

Troll field outage lifts months

A compressor problem at Norway’s largest gas field, Troll A, which will reduce Norwegian exports by up to 37 mcm/day – or more than 10% – until the start of April, has helped boost prices across the coming months, although a drop in demand due to an unseasonably warm end to January – offset the immediate impact of this.

Meanwhile Annual prices have broken out of the longstanding price channel that has established itself since August, pushed higher by Middle East tensions and rising oil prices – with April ’13 Annual heading towards 68 p/th and April ’14 Annual towards 69 p/th, their highest levels in 10 months.

As a result March prices were driven as high as 67.5 p/th, up from a low of 63.7 p/th, with prices across all talked months (out to July) tripping higher in line.

 

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Energy price shift between 17 January 2013 and 06 February 2013

Elec: -0.07%

Gas: +1.14%

Coal: -0.25%

Oil: +4.74%
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