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Energy Market report weekly 25/2/18

WEEKLY ENERGY MARKET REPORT: 25TH – 3RD MARCH 2019

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.

The UK natural gas and power markets experienced a downwards movement for another week amid healthy supply flows from the Continent. Import flows from Norway remained strong with the only exception on Wednesday when an unplanned outage caused disruption in import flows through Langeled, thus supporting a price uplift on that day.

Brent Crude oil traded close to $67/bbl levels throughout the week amid optimism around the US-China trade talks. The likelihood of a positive outcome in the trade talks was further strengthened today following Donald Trump’s statement that the two economies are “very close on reaching a trade deal”.

The YoY inflation rate in Germany fell to the level of 1.4% in January from the 2.3% of last December. The actual rate is below the market expectation that suggested an inflation rate of 1.6%.

The UK energy market last week

  • Strong supply flows from the Continent weighed on power and natural gas prices in the UK during the previous week.
  • The bearish price momentum continued even further on Monday with prompt prices moving by more than 1% on the downside.
  • The Pound traded close to 1.15 per Euro last week despite recent resignations from MPs.

 UK Natural Gas prices  

The UK natural gas market continued trading lower on a weekly basis amid mild temperatures, healthy supplies and low heating demand that remained below seasonal normal levels during the week. However, an unplanned outage at Aasta Hansteen field on Wednesday caused reductions on Norwegian flows. The disruption inflows supported natural gas prices on Wednesday, however, the uplift could not be sustained and as a result, the market started coming off again from Thursday onwards.

Day-ahead closed at 44.75p/th and month-ahead at 44.65p/th, a decrease of 2.5% for both contracts respectively, week on week.

In terms of curve contracts, Sum-19 settled at 44.63p/th on Friday, that is 0.6% lower week on week while Win-19 settled at 58.07p/th, that is 0.2% higher during the same period.

UK Electricity prices

UK power prices mirrored the gas price movement amid relatively weak renewable levels for most of the week and also due to a substantial drop in the carbon market that fell to its lowest point in this year during last Thursday’s session when it settled at €18.80/t.

Day-ahead closed the week at £48.25/MWh and month-ahead at £47.85/MWh, that is 3.5% and 2.7% lower week on week for both contracts respectively.

However, Sum-19 contract slipped by 1.4% week on week and settled at £47.87/MWh on Friday while Win-19 closed the week 0.6% lower at £57.62/MWh.

Macroeconomics

In the oil market, the US-China trade dispute is soon to be resolved, following a recent statement from the US president on Monday morning that a trade pact is a very possible scenario.

In terms of Brexit, the messages are quite mixed. The UK PM pointed out her determination for the UK to leave the EU on the 29th March 2019, whereas EU council’s president, Donald Tusk, stated that an extension to the leaving date would be a “rational decision”. Overall, the trading sentiment seems to be optimistic for the Pound compared to a few weeks ago when Theresa May’s deal was rejected by MPs in a historic vote in January. Currently, the Pound is trading at 1.153 per Euro.

What to watch this week

  • UK wholesale gas prices opened lower on Monday as the weather outlook is expected to remain mild and dry for most of the week.
  • The UK PM is expected to make a statement regarding any progress on Brexit on Tuesday 26 February. A debate in Parliament will follow on Wednesday 27 February.
  • A preliminary estimate of the YoY inflation rate in Germany for February is scheduled for Thursday at 01.00pm UK time.
  • The QoQ GDP growth rate for Q4 in the USA is expected to be published on Thursday at 1.30pm UK time.

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