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SEASONAL FUTURE DEVELOPMENT

ELECTRICITY UK BASELOAD

UK NBP GAS

Energy explained - EnergyIntel Energy Buying & Markets

Trader Insight

Another week of no change on the Russian front, with flows holding through Nord Stream 1 at 20% of capacity. The ongoing saga over the turbine looks increasingly frozen, with the Germans saying it is ready to be sent back to Russia and the Russian’s claiming they can’t or won’t take it without some assurances over sanctions. After the EU agreed on a plan to reduce gas usage by 15% across the bloc, prices had briefly fallen back. But record low river levels in Europe are playing havoc with the movement of coal to power stations, while last week saw the start of an EU ban on Russian coal imports. Storage levels have continued to rise despite the adverse conditions though the rate of increase has slowed and sentiment around supply issues this winter have become more negative while comments from some EU countries that the next two winters may be difficult has seen curve prices continue to significantly rise week on week and markets continue to price in a longer-term freeze of Russian gas imports. The last week has seen day ahead power and gas climb and stay over the 300-mark, the first time they have consistently done so, where if they stay at the level it will be this first month this summer where day ahead prices have out-turned higher than were the front-month contract closed.

COMMODITY PRICE TABLES

PRICE FORWARD CURVES

POWER FORWARD CURVE

GAS FORWARD CURVE

CARBON & OIL PRICES

Trader Insight

Brent Crude tried to rally last week, with two consecutive days where price climbed just over the $100 per barrel mark but failing to close there on both occasions, before all the gains were reversed and prices falling to the exact low of the previous week and now trading just below the $95/bbl level. Carbon prices however have rallied strongly in the last week with the UK contract making a new high since the UK market went live at over £90/tnCO2 and the European contract making a 3-month high at just over €90/tnCO2. The climb has been driven by lower auction volume in August and the ongoing loss of nuclear power and concerns over Norwegian hydro, which will increase demand for coal, with temperature forecasts for September getting revised up.

COLIN GORDON

HEAD OF TRADING & RISK MANAGEMENT

Outlook for the week ahead…

With no major changes to fundamentals in the last two weeks, it seems sentiment is driving prices higher, while as we approach winter it may also be the case that those holding off forward buying or renewing fixed contracts are having to bite the bullet adding to upward price pressure. In this sort of market some good news is needed to begin to reverse the sentiment, while the rise in day-ahead prices will only add to concerns for future periods. With it looking increasingly likely that Russia is digging in with its reduced flows to Europe, at least in the short term for now, the scope for further rises is certainly there. The restoration of the Freeport LNG processing terminal in the U.S. can’t come quickly enough while some sustained wet weather is needed to relieve restrictions on coal delivery.

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