WEEKLY ENERGY MARKET REPORT: 3rd – 9th DECEMBER 2018
December 3, 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.
During last week, the energy market experienced a sideways movement with prices opening softer on Monday but recovering as we approached the end of the week. Wholesale markets in the UK, both for natural gas and electricity closed with a slight uplift in prices.
Wind generation, although really weak at the beginning of the week, it reached record high levels on Thursday and Friday, around 12GW for each day. As a result, gas-for-power demand was low during those days and during the end of the week, CCGT generation was close to 27% of the stack, significantly lower to the 52% at the start of the previous week. In addition, LNG arrivals were strong with tankers arriving most days. Temperatures increased in the middle of the week and that was the main reason for prompt contracts closing lower week on week.
Oil Benchmark, Brent Crude, continued trading at one-year low levels below $60/bbl. However, it has started to recover after the G-20 summit, where a 90-day truce in the trade-war between the USA and China has been agreed. Also, supply cuts are expected to be agreed on the OPEC meeting that will take place on Thursday, 6 December. As of this morning Brent Crude oil is trading at $61.86/bbl, up by 4.12% from last settlement.
The Pound lost 0.32% against the euro during last week amid concerns that the Brexit deal proposed by the EU might not be supported by the UK parliament. Last week saw Mark Carney, BoE (Bank of England) governor stating that the UK might not be able to avoid recession in the case of a No-Deal in Brexit. At the moment, the Pound is trading at 1.124 per Euro.
The UK Energy Market Last Week
- During the previous week, UK power prices closed firmer due to a bullish carbon market and high coal prices despite strong wind supply towards the end of the week.
- Natural gas wholesale prices closed with an uplift despite healthy renewables and high LNG arrivals. Thursday’s outage that caused a decrease in imports through Langeled along with a very weak wind supply during last Monday were the main drivers for the slight increase in prices.
- The Pound lost 0.32% against the euro during last week following BoE governor’s comments that a No-Deal in Brexit might result in a recession for the UK economy. The Pound is currently at 1.124 per Euro.
UK Natural Gas Prices
British wholesale natural gas prices closed firmer during last week. Low wind generation at the beginning of the week followed by cold average temperatures and low flows through Langeled on Thursday had slightly prevailed over a surge in wind generation output and a mild weather during the end of the week. Front-curve contracts, Sum-19 closed at 55.76p/th, 0.7% higher week on week. Win-19 closed higher by 0.4% at a level of 63.89p/th week on week.
On the other hand, the change in weather conditions had a greater impact on prompt contracts, where day-ahead prices closed at 63.40p/th and month-ahead at 65.50p/th, a downwards movement of 2.3% and 1.2% respectively, on a weekly basis.
UK Electricity Prices
During the previous week, UK power prices closed firmer due to high coal prices and a bullish carbon market with prices closing above €20/t on Friday, despite strong wind supply towards the end of the week.
The picture was similar to both prompt contracts and the curve. Front-season, Sum-19 closed at £56.13/MWh and long-term, Win-19, settled at £61.86/MWh, thus both moved upwards by 1.6% and 1.5% respectively, week on week.
Day-ahead increased by 6.6% week on week and closed at £65.25/MWh on Friday, and month-ahead moved slightly down by 0.6% on a weekly basis and closed at £63.12/MWh.
Sterling has weekend against the Euro and currently trading at 1.124 per Euro amid concerns around the UK economy if the deal proposed by the UK Government and the EU is not supported by the parliament.
During the G-20 summit last week, the USA and China agreed to cease the trade-dispute for a period of 90 days, during which no trade tariffs will be imposed by one country to the other. In terms of GDP in the US economy, the second estimate for Q3 illustrated an annual rate of 3.5% in Q3 is in line with expectations.
What To Watch This Week
- Prices on Monday opened firmer amid a jump in oil prices as Russia and Saudi Arabia agreed to continue their production pact during the G-20 summit in Argentina last week.
- Four LNG cargos are expected in the UK before Saturday.
- The next OPEC (Organization of the Petroleum Exporting Countries) meeting is scheduled for Wednesday, 6 December, during which supply cuts are expected to be agreed.
- Data on non-farm payrolls will be released on Friday 7 December at 1.30pm UK time.
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