Energy Market Risk Analysis | Mid February 2018

Choppy conditions amid gas swings

UK power and gas prices have had a choppy fortnight, with levels moving up and down multiple times, as changing weather, gas supply glitches, tumbling oil and coal markets and a soaring emissions market have all jostled to determine direction.

April ’18 Annual UK power, the bellwether end-user period, is now discussed in line with where it was at the start of the month – around £46/MWh, having slipped briefly to a four-month low of £45.2/MWh during its fluctuations. October ’18 Annual has been tracking it at a discount of just under £1.5/MWh.

Prices swing on outages and weather

UK gas prices have been volatile in February, unplanned outages and weather changes driving the fluctuations in the short-term market, which in turn has had a strong influence on the longer-term market, helping it to almost fully resist a slump in oil prices.

A shutdown of the Forties pipeline on the 7th February due to a valve malfunction caused an intra-day spike in short-term prices, with Within-day and Day-ahead jolting above 54 and 53 p/th respectively ─ the market sensitised to problems in the pipe following its December shutdown for crack repairs.


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