Energy Market Risk Analysis | Early October 2014

Down – but less than other markets

Annual UK power prices have chipped steadily lower for most of the last fortnight, coming under pressure from further general weakness on global energy markets – gas, oil and coal have all registered further losses. This being said, there has however been some resistance to the bearishness seen elsewhere, amid ongoing concern about UK electricity supply tightness over the coming months due to continuing extended outages at four major power stations.
April ’15 Annual is down around £1/MWh, or 2%, at £52/MWh, while October ’14 Annual went off the board at £49.5/MWh, its lowest level since August.

 

Prices soften on gas deal hopes

Reports that Ukraine and Russia have agreed to work towards signing a six-month, 5 to 10 BCM gas deal drawn up by the EU have helped pressure gas prices in recent days, although no formal agreement has been reached and no date for new talks has been set to hammer out the details. Meanwhile further violence has broken out in eastern Ukraine and Slovakia has reported a halving in the volume of Russian gas it receives, interpreting the cut as a punishment for forwarding gas onto Ukraine over the last few months.

Alongside a rally in short-term prices on the back of tightening supply, this has reintroduced a degree of choppiness back into the market this week, after a second half of September that was distinctly bearish.

 

The previous market risk analysis for Late September


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Energy price shift between 16 September 2014 and 04 October 2014

Elec: +?%

Gas: +?%

Coal: -3.04%

Oil: -3.95%

 

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