Weekly Energy Market Review – 22 September 2016

Weekly Energy Market Review – 22 September 2016

Annual gas prices rose marginally in the last week, while the power market has held around the elevated levels it had reached the previous week.

Annual gas prices rose marginally in the last week, while the power market has held around the elevated levels it had reached the previous week. For both the gas and power markets, short-term supply-demand issues have provided the focus. While these are events occurring now, the UK energy market is looking at them in the context of the possibility of a similar situation during the winter.

Tight power supply margins were expected to continue into the start of this week, with further nuclear outages, maintenance on the UK-France Interconnector, as well as generally higher demand. As in the case of the previous week, there were ultimately no system alerts from National Grid and additional supply came on line in reaction to spot and Day-ahead prices escalating back towards recent highs. National Grid is continuing to forecast similarly tight margins towards the end of the year, which is helping to support annual power prices.

Meanwhile, the gas system has had a variable week with regard to supplies, varying widely between opening under and oversupplied. This was caused by fluctuations in both imports and the use of LNG, as well as demand increasing. The increase was partly due to exports, but also a rise in the use of the fuel in generation. As with power, this has provided some upside for gas, as demand is expected to be higher in the winter. However, the scale of the seasonal demand increase will depend significantly on weather conditions. The first forecasts for the winter have indicated above seasonal normal conditions going into the period, but a drop in temperatures for December.

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Ross Moffat

Posted by on Thursday, the 22. September at 11.33

Ross Moffat has been a part of the Market Intelligence team at Utilitywise since early 2014. His responsibilities include delivering Market Intelligence reports to clients and managing the Utility Insights Twitter account. Ross has a first class Honours degree in Business and Marketing from the University of Stirling.