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Energy Market Report – 27th April 2018

Key Points:

  • UK Gas prompt prices edged lower this morning, amid falling domestic demand and healthy supply from Norway.
  • U.S. oil exports hit a record high, on the back of higher shipments abroad.
  • UK house prices edge up in April, after reaching seven months slow in March.

UK Electricity Prices:

The prompt:

The UK Electricity prompt market witnessed limited activity this morning. The demand system is mainly fuelled by gas (53%), nuclear (19%) and coal (8%). Wind power generation dramatically dropped since yesterday and it is currently below 2%. Day Ahead prices are trading in the range of £55.60 – £55.80/MWh, whereas Month Ahead is between £51.20-51.40/MWh.

Forward Curve:

Seasonal contracts are largely unchanged since yesterday. Winter-18 is heading towards the £56/MWh mark, while Sum-19 is consolidating around £45.3/MWh. European coal contracts (API2) and Brent crude are trading lower this morning. We would expect the forward curve to be trading downwards today as comfortable fundamentals prevail.

UK Natural Gas Prices:

The prompt: –

Day Ahead and Month Ahead prices edged down this morning, as a healthy flow of Norwegian gas has been pumping through the Lanagaled pipeline. The flow is currently about 67 mcm/d (million cubic meters per day). In addition, LNG send outs from Dragon boosted overall gas supply today.

Forward Curve: –

Seasonal contracts are edging up, as the tension between Washington and Teheran is mounting. The French president supported U.S president Donald Trump in re-negotiations of a deal with Iran that was agreed in 2015, in which Iran suspended its nuclear program in return for western powers lifting crippling sanctions. A part of the sanctions was to limit an export of Iranian oil crude to Western markets. At the same time, a rapid growth in U.S. shale production is leading to record exports.