WEEKLY ENERGY MARKET REPORT: 10th – 16th DECEMBER 2018
December 11, 2018
Ignite bring you the latest energy news across the UK and Europe. We have the expertise when it comes to translating energy industry consumption trends. Here’s the latest news from the UK, Europe and the rest of the world.
UK power and natural gas markets experienced downwards movement during the previous week. Although the week started with prompt contracts increasing due to cold weather forecasts, the momentum reversed during the following days. Increased import flows from Norway, strong LNG expected supplies and weather forecast revisions that suggested milder temperatures have contributed to prices moving lower, week on week.
Oil prices rebounded following the OPEC (Organization of Petroleum Exporting Countries) meeting last week, where the group’s member countries decided to reduce oil supply. Russia (which is a non-OPEC member) decided to agree to oil cuts. Overall, a reduction of around 1.2 million barrels per day is expected to take place following the decision. As of this morning, Brent Crude is trading close to $61/bbl. On the other hand, US oil production reached record high levels the previous month, thus making USA oil exports a concern for the oil reduction proponents.
The Pound drop in value continued even further during last week amid the UK parliaments decision which forced the government to publish the legal advice related to the withdrawal agreement between the UK and the EU. The Pound is currently at £1.11 per Euro, that is almost a 1% drop from last Monday.
The UK Energy Market Last Week
- Natural gas wholesale prices closed softer during last week amid healthy renewables and strong LNG arrivals. In addition, an increase in Norwegian flows and a weak oil market complex contributed to prices moving further down despite increased gas and power demand.
- UK power prices followed the gas price movement and closed lower week on week. Strong wind generation and weak coal and carbon markets pulled the UK power prices down.
- The Pound lost almost 1% against the Euro during last week following UK parliament decision to publish the legal advice related to the UK divorce deal with the EU. The Pound is currently trading at £1.11 per Euro.
UK Natural Gas Prices
UK natural gas prices closed softer during last week. Healthy renewables generation, strong LNG expected arrivals and a weak oil complex have contributed to a downwards piece momentum.
Day-ahead decreased by 8.2% on a weekly basis and closed at 60.70p/th, and month-ahead declined by 6.8% and settled at 63.65p/th, week on week.
Changes were more moderate, as expected, on curve contracts with front-curve, Sum-19 moving lower by 1.7% week on week and settling at 55.40p/th. Long-term, Win-19 contract moved lower at a level of 63.72p/th. That represents a down movement of 1.2% week on week.
UK Electricity Prices
UK power prices mirrored the gas price movement during the previous week. Strong wind supply and a downwards movement in carbon prices, mainly during last Wednesday, were the main drivers that pulled prices lower week on week.
Month-ahead prices decreased by 5.2% week on week and closed at £62.75/MWh. Sum-19 declined by 1.5% and Win-19 by 1.1%, thus both settling at £55.86/MWh and £61.76/MWh respectively.
UK industrial production dropped by 0.6% month on month in November with pharmaceutical products experiencing the biggest decline, by 5% on a monthly basis. The news came despite market expectations of 0.1% gain.
Sterling has weekend against the Euro and currently trading at £1.11 per Euro due to uncertainty caused by UK parliament decision to publish Brexit legal advice.
OPEC (Organization of Petroleum Exporting Countries) members and Russia agreed on a cut in oil supplies by almost 1.2 million barrels per day. Oil prices are likely to move upwards during Q1 2019 but they currently remain close and even below to last week’s level amid increasing US oil supply.
What To Watch This Week
- Prices on Monday opened softer amid a fall in expected average UK temperatures and an increase in demand levels.
- LNG supplies remain strong with four tankers expected to arrive in Britain by Saturday this week.
- Data on YoY inflation rate in the USA for November will be published on Wednesday at 1.30 pm UK time.
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