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Energy Market Report – 14th May 2018

Key Points:

  • UK Electricity and Gas prices slipped amid falling Brent Crude prices and healthy supply from Norway.
  • UK consumer spending continues to fall in April according to Visa.

UK Electricity Prices:

UK electricity prices for near delivery are trading lower this morning, amid falling gas counterparts. Day ahead is down £0.35/MWh (0.66%) and consolidating around £52.60/MWh. The majority of the power generation mix is from nat gas today (37%) and nuclear (20%). Month Ahead is oscillating around £53.50/MWh, up by £0.35/MWh (0.65%). It is worth noting that the UK electricity Month Ahead contract is trading lower than Dutch Month Ahead, therefore we are likely to see an increase in electricity transmission to the Netherlands.

Further out the curve, prices witnessed limited activity. The front winter contract (Winter-18) edged down marginally and it is currently trading about £59.50/MWh, whereas Sum-19 is trading just below £49/MWh.

A stronger pound and falling carbon emissions contributed to a bearish sentiment spreading across the UK electricity curve.

UK Natural Gas Prices:

UK Gas prices are trading lower this morning.  Day Ahead and Month Ahead slipped about 1% and 0.56% amid a healthy supply from the UK Continental shelf and Norway. Last week, due to outages at some processing plants, the supply to the UK was limited.

Vladimir Rusanov, the LNG tanker, is expected to arrive in the UK on 18thMay, bringing about 170,000 cubic meter of gas.

Further out the curve prices are also trading lower. While Win-18 has not moved significantly since Friday, Sum-19 dropped below 48.75 p/th. Brent Crude prices dropped this morning and they are trading about $76.97/bbl.

Macroeconomics:

UK consumer spending has fallen in the month of April. The announcement came from Visa, which observed a fall in spending about 2% year on year. Last week the Bank of England announced that economic growth slowed down by 0.1 % in the last quarter.