Energy Market Risk Analysis | Early November 2014

Prices consolidate after recent falls

UK Annual power and gas prices have shown signs of consolidating in early November, following a seven-week bear trend, as new Ukraine tensions have tussled with further oil weakness to determine direction.  April ’15 Annual UK power has oscillated either side of £50/MWh, while October ’15 Annual has tracked it at a 50 pence premium.
More violence in eastern Ukraine, amid reports of new Russian military hardware crossing the border, has re-agitated fears that the crisis there may escalate and still lead to Russian gas supply cuts this winter, only days after Russia and Ukraine signed an interim supply deal and Ukraine settled some of its gas debts with its neighbour.

 

Downtrend snags on Ukraine again

The price downtrend that has been underway since the end of the summer was interrupted in early November as the build-up of Russian troops and military equipment on and over the border with Ukraine, following elections in rebel-held areas, threatened the notional ceasefire between the two sides.

Prices across most forward periods rose a general 1 penny/therm in response, although any upside was first countered and then overriden by further weakness on the oil market, which slumped to a four-year low. Forecasts of unseasonably mild weather continuing until the end of the year and expectations of educed gas demand from power generators, as several nuclear reactors prepared to return onstream after extended outages, also lent some bearishness.

 

The previous market risk analysis for Mid October


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Energy price shift between 03 November 2014 and 13 November 2014

Elec: -0.54%

Gas: +0.17%

Coal: -0.42%

Oil: -5.6%
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