An unseasonably mild start to the winter season has meant the gas system has yet to come under significant stress from high demand. Above average temperatures are forecast to continue into November. The gas system has been balanced throughout, as imports from Norway, UKCS production and LNG sendout remain stable. Rough storage withdrawals continue at 12mcm/day. November gas prices held a 5p/th premium over the Day-Ahead market for much of the week which has encouraged injections into storage. Medium Range Storage (MRS) has been used on occasion, but injections have pushed stock levels to 13TWH, over 90% of capacity.
With minimal storage reserves, the UK will be more dependent on pipeline imports from Norway and Europe, and LNG deliveries this winter. Competition for supply, particularly during a cold spell which has yet to materialise this winter, is likely to push prices higher.
Short-term power prices have fallen in the last week, as strong winds and above seasonal normal temperatures have helped to suppress energy demand. Day-Ahead prices are marginally higher, but remain below £50/MWh. They have avoided the volatility seen this time last year which had been caused by concerns over lower French nuclear availability.
French price support this year is likely to be limited to the November contract, with around 20GW of capacity due back online by December. Reduced risk over French nuclear supply has helped to push November power prices in the UK down 3%. European coal prices have moved higher, with the 2018 contract setting new multi-year highs at $86/tonne. However, this has provided minimal support to the power curve. Peak demand was close to 42GW. While consumption has dropped during this week’s school holiday period, a significant jump is expected at the end of October. The clock change cuts the number of evening daylight hours, increasing lighting consumption.