Energy Market Risk Analysis | Early July 2014

Year of the Bear continues

Hitting the half-way point of the year, 2014 continued to establish itself as one of the most decidedly bearish on record (following an exceptionally stable market in 2013) – with UK electricity and gas prices dropping back again after shrugging off mid-month geopolitical fears in Iraq and Ukraine.
Fresh long-term lows have once more been seen in many periods – Winter ’14, for example, falling to £48/MWh for the first time since it started being discussed in 2011 – and dragging October ’14 Annual down to  £47.5/MWh. Winter has now shed 16% in value since the start of the year.

 

October ’14 Annual hits record low

Prices have come off sharply across the board since the mid-June market run-up caused by the Iraqi insurgency, Russia stopping gas supplies to Ukraine and UK imports dropping off. October ’14 Annual – the key benchmark for many end-users – has, for example, slumped to 55 p/th for the first time since it first started being discussed in October 2008.

Although Russia has turned off gas supplies into Ukraine, exports of Russian gas through Ukraine actually increased over the last fortnight, as the Nord Stream pipeline linking Russia and Germany went into full outage for five days and partial outage for five further days, leading to gas being diverted. Coming after reports of an explosion in one transit pipeline this has boosted confidence in transit flows to Europe continuing via Ukraine.

 

The previous market risk analysis for Late May


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Energy price shift between 16 June 2014 and 01 July 2014

Elec: -3.52%

Gas: -4.85%

Coal: -1.74%

Oil: -0.76%
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One Response to Energy Market Risk Analysis | Early July 2014

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