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Energy Market Report – 3rd May 2018

Key Points:

  • The UK Gas and electricity prices are moving sideways with no clear direction today.
  • UK PMI index up from 20 month low.
  • U.S. – China trade talks kick off in Beijing.
  • Euro Zone inflation unexpectedly slips in April.

UK Electricity Prices:

The UK Electricity spot prices are trading lower this morning. Day Ahead is currently 0.2% below yesterday’s close. The Month Ahead contract edged up this morning by 0.24% and it is trading in the range of £50.70/MWh – £50.90/MWh. Looking from the power generation mix perspective, natural gas and nuclear are the main source of electricity today. The system electricity demand is about 37.35 GW.

Forward winter contracts moved up. Winter-18 is up by 0.36% and the price is consolidating around £55.90/MWh, whereas Win-19 is up 0.12%, moving towards £51.4/MWh mark. Conversely, summer seasonal contracts edged down, Summer-18 and Summer-19 is down by 0.05% and 0.12% respectively.

UK Natural Gas Prices:

Natural gas contracts Day Ahead and Month Ahead are trading lower 1.5% and 0.1% respectively. Rising temperatures eased off gas demand in the UK. Seasonal contracts are down this morning except Win-18. Winter -18 is up 0.4%, whereas Sum-19 and Win-19 are down about 0.57% compared to yesterday’s close.

Macroeconomics:

The UK Purchasing Managers’ Index (The IHS Markit/CIPS UK Services PMI) rose to 52.8 in April from 51.7 in March. Although, this is a positive sign of business recovery from the 20-month low in March, experts consider the increase as a modest rebound.

The Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The purpose of the PMI is to provide information about current business conditions to company decision makers, analysts and purchasing managers.

Read more: https://www.investopedia.com/terms/p/pmi.asp#ixzz5EQtFJLKU