Energy Market Risk Analysis | Late May 2014

Flat Annuals, short-term softer again

Annual UK power prices have been their flattest in several months over the last fortnight, exhibiting little of the volatility that has characterised the market since the start of this year. At the same time short-term UK power prices have been pressured by weak demand and good supply, pushing levels to a new 4-year low.
The stability in longer term prices came as the market held its breath ahead of a June 3rd deadline for Ukraine to settle its gas debts with Russia or face gas supply cuts.

 

Day-ahead slumps further

The second half of May started with Day-ahead prices kicking higher as Norwegian maintenance tightened incoming flows, but this was short-lived and they were soon resuming their downwards trajectory, since shedding almost 3 p/th, or 6%, in value. Reaching 42 p/th, they have touched their lowest level since October 2010.
While the bearishness has spilled across forward periods too, it has been to progressively smaller degrees, grinding to a near halt by Summer ’15 – from there onwards prices have been broadly static.

 

Ukraine paying Russia $786 million towards its gas debts appears to have broken the gas dispute deadlock between the two countries, with Gazprom putting back its deadline for prepayment soon after and the EU’s Energy Commissioner saying that talks between the parties were now likely to lead to a deal being agreed within days.

 

The previous market risk analysis for early May


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Energy price shift between 19 May 2014 and 02 June 2014

Elec: -0.34%

Gas:0.01 %

Coal: -2.79%

Oil: -0.91%
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One Response to Energy Market Risk Analysis | Late May 2014

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