Weekly Energy Review – 19 January 2017

Weekly Energy Review – 19 January 2017

Year-ahead gas and power prices are holding around the highs for the year, supported by supply concerns and cold weather forecasts which have recently been revised to extend further into January.

Year-ahead gas and power prices are holding around the highs for the year, supported by supply concerns and cold weather forecasts which have recently been revised to extend further into January.

For UK power, forecasts of low wind at the start of the week prompted National Grid to indicate negative supply margins for the period. Ultimately both gas and coal-fired plant have risen sharply to meet demand requirements, which have tended to be below National Grid expectations from last week. The supply position has been much tighter in France. The cold weather contributed to France calling on energy consumers to reduce demand in order to offset expected record peak demand levels in excess of 100GW. The UK has been exporting to France but the link between UK and France remains constrained through to next month.

Meanwhile, the UK gas supply system has coped with the colder weather, which has increased demand. However, forward prices remain supported by the concerns over whether this will continue to be the case. The UK has reduced supply flexibility this winter. With the ongoing problems at Rough, the UK storage position is notably weaker year-on-year. Meanwhile, there remains no further cargoes of LNG. High Asian prices are mitigating the possibility of cargoes heading towards the UK. At the same time, the colder conditions across Europe mean that the UK is competing with the rest of Europe for available supplies which it could import.

Snapshot Year-ahead Wholesale Prices 19 January 2017 Utilitywise
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Ross Moffat

Posted by on Thursday, the 19. January at 11.41

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.