There has been minimal change in the gas and power markets week-on-week. Year-ahead contracts have fluctuated around three month lows, following a steady downward trend seen through February. Healthy supply and demand fundamentals continue to provide the main source of downward pressure to the energy market. Rising temperatures heading into the summer season have contributed to falling demand across gas and power. The UK clock change at the end of March will further cut peak power consumption as evenings stay lighter for longer. Brighter conditions this week have already supported solar generation, which peaked at over 5.5GW on Tuesday. The renewable source will provide a further supply boost over the summer season, cutting the need for gas and coal-fired generation. Strong wind generation this week added further downside to the prompt. Day-ahead power prices are down over £10/MWh month-on-month, hovering around three-month lows at £43/MWh.
The UK gas system has been oversupplied this week, pressuring the Day-ahead market. The UK has been able to export gas over the Interconnector to Europe, with higher LNG sendout ensuring supply comfortably meets demand. Six LNG tankers have been confirmed for March arrival, the most in one month since September, and delivering a higher supply than the last three months combined. Sendout from the UK’s LNG terminals are averaging over 20mcm so far this month, up four-fold from February. While the short-term supply outlook remains healthy, there are still concerns over the availability of the Rough storage site for next winter. Injections are at present unavailable until at least July with stocks down around 50% year-on-year. Entering another winter season with low stored gas levels would increase the pressure on imports and LNG to meet the shortfall, potentially pushing up prices.