Energy Market Risk Analysis| Mid July 2016

Winter leaps on gas storage shock

UK power and gas prices for the coming winter leapt mid-July, as a 42-day outage at the UK’s only large-scale gas storage facility, Rough, was extended by at least seven months, reducing its ability to act as a key source of gas supply in the winter. Some withdrawals from the site are likely but no further injections will be possible until March and the facility is currently less than 40% full.

Rough outage extension spooks market

News that a shutdown of the UK’s largest storage site, Rough, is to be extended until next spring blew Winter ’16 prices higher and sent prices across August and September reeling lower in mid-July, with varying knock-on effects on other periods.

Although Rough’s operator Centrica Storage Limited announced that the original issue with a well that had prompted a 42-day shutdown of the site on June 22nd had been rectified earlier than expected, it identified potential uncertainties in the remaining wells at the old gas field.

Energy price shift between 03 July 2016 and 18 July 2016

Elec: +0.34%

Gas: +1.15%

Coal: +3.11%

Oil: -4.93%

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