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WEEKLY ENERGY MARKET REPORT: 16th SEPTEMBER 2019

Ignite bring you the latest energy news across the UK and Europe. We track and analyse changes in the energy market to keep you informed and up to date. Here’s the latest news from the UK, Europe and the rest of the world.

Energy prices in the UK and Europe soared last week following the news reported by EDF that some of its French nuclear reactors might contain substandard parts. On top of that, the Dutch government has announced that the Groningen natural gas field, the largest onshore natural gas field in Europe, will cease to operate by 2022, that is 8 years earlier than was originally planned. The markets reacted aggressively on the upside following the news on Tuesday.

In the wider energy complex, oil prices surged on Saturday following the two drone attacks at Saudi Aramco’s oil infrastructure. As a result, the production of approximately 9.8 million barrels per day has been affected. Oil prices jumped by more than 8% within-day and currently trading at $65.45/bbl.  The US blamed Iran for the attacks but Iran has denied involvement.

The UK energy market last week

  • British wholesale power prices soared by 4.2% on average on the curve following the overall price spike caused by the faulty parts in EDF’s nuclear reactors.
  • Natural gas prices surged last week after the announcement that the largest natural gas onshore field, in Groningen, will stop operations by 2020, 8 years earlier than planned.
  • As of this morning, power prices in the UK opened higher on the back of the firmer oil and carbon prices and the low wind output.

UK Natural Gas prices

The British wholesale natural gas prices surged by 4.4% on the curve contracts on average, during last week.

Day-ahead closed the week at 30 p/th, that is 14.9% higher, week-on-week, while month-ahead increased by 21.9% within-week and settled at 38.78 p/th.

In terms of curve contracts, Win-19 rose by 9.6% before settling at 49.51 p/th whereas Sum-20 increased by 4.6% at 44.52 p/th.

UK Electricity Prices

British wholesale power prices rose during the previous week on the back of the faulty parts included in nuclear reactors by EDF.

Day-ahead dropped by 2.8% and closed at £38.50/MWh while month ahead increased by 13% and settled at £46.35/MWh.

Win-19 settled at £54.98/MWh and Sum-20 at £48.99/MWh, an increase of 7.8% and 4.5% within-week, respectively.

Macroeconomics

The UK trade deficit increased to £0.22billion in July, following the £0.13billion deficit in June 2019, as imports rose at 2.7%, higher from the 2.5% advancement in exports.

The ECB relaunched its quantitative easing programme in order to meet its 2% inflation target by purchasing €20b of net assets on a monthly basis for as long as it is considered necessary by the bank. In addition, Mario Draghi announced that the deposit facility will drop by 10 basis points to -0.50.

what to watch this week

Outlook: The overall outlook for October is currently looking warmer than seasonal normal temperatures. Strong LNG arrivals with 3 tankers expected to arrive by the end of the month are expected to provide good levels of supply.

Wednesday September 18: GB’s YoY inflation rate for August will be made known. Inflation in July was at 2.1% with the forecasts now suggesting 1.9%.

Thursday September 19: The BoE will decide on the level of interest rates which is currently at 0.75%.

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