Energy Market Risk Analysis | Early February 2017

Rollercoaster ride continues

It has been another volatile fortnight across UK energy markets, with prices first thrown higher and then lower by the European cold snap intensifying and then ending, only to be propelled higher again at the end of January/start of February as gas infrastructure issues and revised, colder forecasts agitated supply fears for the remainder of this winter, with knock-on effects further forward.

New Rough delay and cold bolster

A further delay in the restart of full withdrawals from the UK’s largest storage site, Rough – by a month, to the start of March – and the shutdown of two platforms at the Elgin-Franklin gas field following well-drilling “difficulties”, alongside new forecasts suggesting February will be colder than previously expected, caused a sharp rally in short-term UK gas prices at the end of January/early February, with the bullishness filtering into forward prices too. This came at the end of a fortnight in which the market had already witnessed prices surge and slump again.

Energy price shift between 17 January 2017 and 01 February 2017

Elec: -0.82%

Gas: -1.46%

Coal: +0.82%

Oil: +0.96%

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