Energy Market Report – Electricity

  • Market Comments January

    Tuesday 2nd January 2018 - Power prices in the UK and Europe assembled into the close of 2017 making very minor gains as the direction of the feedstocks gave conflicting signals to the market. Gas fell while coal and oil made minor gains, carbon prices also rallied into the close gaining around 20 cents. This morning, prices are almost as scarce as traders in the market, with what little is out there we see the German power market down on high wind and weak demand, both spot and curve are dealing lower, the UK power market is mostly unchanged and the Nordics are being supported by a rare dry spell. Cooler temperatures forecasts from the 5th of January onwards are also providing support.

    Wednesday 3rd January 2018 - Power prices took a dip in the UK and Germany yesterday on the back of a dip in gas prices coupled with an over supply in both gas and power from mild weather and increased wind power production. This morning, power prices are a touch softer driven lower in the UK with gas prices while improved wind production and a retracement in carbon prices have pushed down both Nordic and German power prices. The greatest losses have been focused at the front of the curve and in the spot while longer dated contracts are mostly unchanged in early trade action.

    Thursday 4th January 2018 - A return to work after the holidays and declining wind production led to gains in spot prices. On the respective curves changes were too modest to be indicative of any direction in the market and power traders were confused as feed stocks and oil went in different directions. Weather forecasts have been revised a bit milder, the result has been a drop in power prices in the UK, Germany and even the Nordics which are currently drier than normal. Longer dated contracts are mostly unchanged as oil and coal have made some minor gains on the day.

    Friday 5th January 2018 - Friday 5th January 2018 - Generally warm weather, weak gas, coal and carbon sent down power prices across Europe yesterday. The front mostly taking the hardest hit as weather was an important driver, but further dated products also came off. Europe will see a drop in temperatures over the next days, but it is mainly in the UK and Scandinavia we will see below normal temps. And most forecasts point to a warm up again during next week, making the cold snap rather short lived. This is bearish for the European energy complex, and therefore also for power. Today forecasts have turned even warmer, and power is being sold off in the front. Coal hasn’t really started yet, so there isn’t a lot of new inputs to the curve.

    Monday 8th January 2018 - Falling input from weather for most of Europe and from gas sent down the power in the front on Friday. Despite stronger coal, the curve failed to close in positive territory. For the UK a stronger pound also helped to the bearish sentiment. We are in the middle of a cold spell, but this seems to primarily affect the UK and Scandinavia, while the rest of Europe in general looks normal to mild. Forecasts have turned a tad colder since Friday, and we see the front end of the power curve up this morning. Coal has also traded up a notch, supporting the power curve as well.

    Tuesday 9th January 2018 - It was stated yesterday that Germany will no longer aim to reach its earlier announced 40% reduction in carbon dioxide by 2020. Players had until this announcement anticipated a phase-out of cheap lignite and hard coal and build a premium into the far end of the curve due to a substitution towards more expensive power generation. The announcement yesterday is now believed to postpone the phaseout of lignite and hard coal and prices in Germany corrected almost 1 Euro down on Cal-20 and 21. Theoretically the decision should also affect the carbon market in an upward direction since more CO2 is now likely to be emitted. Emissions opens up this morning and together with rising gas prices, power prices are supported across the board.

    Wednesday 10th January 2018 - Strong contributions from weather and gas pulled up power contracts across all of Europe yesterday, with the front end taking the lead. It is getting colder these days and the wind is easing off, supporting spot prices across all countries. According to forecasts, temperatures are still going down the coming days for Germany and the UK, and with low wind, spot prices are expected to move even higher. Forecasts are a bit warmer today compared to yesterday, giving a bearish signal to the front end of the power curve, and coal is also coming off from the beginning.

    Thursday 11th January 2018 - Yesterday coal took a hit, falling 0.79 $/ton for front cal. This pulled down the curve of continental power despite strong gas on the curve. For UK power the bearish coal dampened the effect of the bullish gas, but wasn’t enough to counter this. Gas was up on the announcement that NAM, the operator of Groningen will propose production cuts as a consequence of the large earthquake Monday. Power markets are slightly up in the front this morning as weather forecasts are slightly colder. For further dated products the market will be looking for coal and gas. The direction of gas today will depend upon if or what information the market will receive about the proposed production cuts at Groningen.

    Friday 12th January 2018 - Prices for coal have seeded in value since it posted new highs on Monday this week. This sent down power contracts across Europe yesterday, where gas prices on continental hubs were also down. This morning, weather has taken a turn to the colder for most of Europe. The American weather model points to a significant cold spell over most of Europe. The European weather model is not as bullish, but it has sparked a buying frenzy in the front, where German power is up 0.75 €/MWh for Feb-18. Gas and coal is also up, with gas being supported by the same weather change as the power market.

    Monday 15th January 2018 - Power prices dropped on Friday in spot markets in the UK and Europe on wind output, while longer dated contracts made increases with the underlying feedstocks. Gas, coal and oil drove up prices and bullish sentiment however gains were modest. This morning, a reversal in the outlook for cold weather to continued warm and windy conditions has pressured the markets for feedstocks and for power itself. All the power markets are being dealt lower as traders readjust their pricing expectations to a continuation of mild conditions.

    Tuesday 16th January 2018 - Power prices were lower yesterday across the forward curves of the UK. The moves and unpredictability in weather forecasts drove the drops in prices coupled with the moves in natural gas and carbon prices. on a pick-up in demand as renewable production dipped. This morning, prices have retraced. By contrast, spot prices made gains in all three markets some of yesterday's losses as the latest weather forecast runs have flipped to slightly cooler. Gas and coal have made very minor gains in early trading, contributing to the gains in power prices.

    Wednesday 17th January 2018 - UK power prices fell yesterday following a sell down in NBP gas prices. This morning, power prices are down across the board as temperature forecasts have been revised warmer and wind output is expected to remain high. Furthermore, gas and coal prices have fallen, giving more reason for traders to deal power prices to the downside.

    Thursday 18th January 2018 - Power prices made increases on the spot yesterday in the UK as temperatures and wind are dipping in short term before improving over the coming week. By contrast, curve prices in the UK and in Germany fell, following NBP gas, API coal and warm weather forecasts. This morning, Prices are down across the board and across all power markets on falling feedstock prices and revised forecasts for warmer and windier weather.

    Friday 19th January 2018 - Power prices varied yesterday across the UK and Europe, weak gas prices sent the spot lower on UK power while longer dated contracts were mostly unchanged. This morning, prices are up from yesterday with power markets making gains on the back of slightly stronger coal and the increased price for carbon credits.

    Monday 22nd January 2018 - On Friday spot power prices made improvements on cool temperatures and low wind production, by contrast curve prices in the UK dipped on the mild forecasts as did prices in the Nordics which also came under pressure from a robust hydro balance. This morning, power prices are softer in Germany while being closer to unchanged in the Nordics and the UK which have only traded in thin volume. Weather forecasts are mostly unchanged with a slight hint of cooler weather, slightly below normal, in the first week of February.

    Tuesday 23rd January 2018 - Power prices in the UK were mostly sideways, as coal, oil and gas all made modest gains. By contrast, spot prices were dealt lower as demand faded in the face of mild temperatures and robust wind production. This morning, prices have made minor gains on strength in feedstocks like coal and gas, coupled with concerns of a drop in temperatures below normal at the end of the 15-day forecast. Spot prices remain rather weak today, as temperatures are still expected to climb for the next couple of days and wind output remains strong.

    Wednesday 24th January 2018 - Power prices fell yesterday. Very mild weather and renewables production in Germany and the Nordics pressured spot prices and sent curves lower as risk was taken out of the market. Falling coal and gas prices aided the decline while, carbon which has been on a tear as of late, provided some resistance as it gained a quarter of a euro. This morning, prices are weaker in the UK which is following NBP gas to the downside.

    Thursday 25th January 2018 - Power prices dropped in the UK yesterday following the fall in gas prices despite gains in oil and carbon. This morning, coal and gas have rebounded slightly putting UK power in positive territory, German power remains weak and is trading down slightly on the very mild temperatures while the Nordics are broadly unchanged with the very front making gains on an expected drop in wind.

    Friday 26th January 2018 - Power prices made improvements in the spot yesterday across Europe and the UK as wind output began to decline and the mild temperatures hit their peak and have begun to recede. This morning, gas prices are up and coal remains steady, oil is mostly flat. Weather forecasts continue to indicate a possible drop in temperatures in early February which has also helped to send the markets higher in early trade action. The UK has suggested it would be interested in remaining in the EU ETS, carbon trading scheme/market even after BREXIT, good news for the program.

    Monday 29th January 2018 - Power prices varied in trading on Friday with the UK power market taking a cue from the NBP gas market and shedding some value while the German and Nordic power markets moved up with coal and a on gains in the spot price. This morning, gas and coal prices are stronger which is providing a lift to German power prices, the largest gains have been at the front of the curve as temperatures and wind are expected to fall in the coming days. The UK power market will track gain in gas, it is slow to open with bids and offers being quite wide.

    Tuesday 30th January 2018 - Yesterday’s power prices were down across all markets for future delivery, from the front month to longer dated seasons and calendar contracts. Weakness in the UK power was driven by falling prices in the NBP gas market coupled with weakness in the broader energy complex, which saw oil lead the way down for coal, gas and power. Power prices should be in positive territory this morning in the UK following minor gains in gas while German power is up at the front with cooler forecasts and slightly lower on the far end of the curve. The Nordics are slightly wetter and are, on balance mostly unchanged.

    Wednesday 31st January 2018 - Power prices fell across the board in all markets and on all contracts yesterday, driven by weakness in their respective feedstocks, such as NBP gas in the UK and API2 coal in Germany. Weather forecasts showing generally normal conditions for the time of year plus very weak coal prices, down almost $2.25/ton were the primary drivers, however a dip in carbon and a sell-off on major stock markets added to the bearish sentiment. This morning, the market will feel the whiplash as forecasts have swung towards cold for next week and traders are scrambling to cover short positions. Gas prices have moved up with the forecasts and UK, German and Nordic power are all up in early trading.

  • Market Comments February

    Thursday 1st February 2018 - Power prices recovered yesterday, following on a forecasted drop in temperatures that will be accompanied with a sharp drop in wind production. The market shrugged off and almost $2 drop in the price of coal, taking the 2-day losses on the commodity to more than $4. Prices for UK power followed the rally in the NBP gas market while the Nordics made gains only at the front while the curve remained weak on a strong hydro balance. This morning, the market is up further on higher gas and coal prices coupled with concerns over the Groningen production announcement and, of course, the cold weather forecast. Several traders are already discussing the possibility of a blocking high pressure system which could keep the cold over Europe for an extended period of time.

    Friday 2nd February 2018 - Power prices rose yesterday on forecasted cold temperatures, less wind and drier conditions across Europe and the UK. Longer dated contracts were less affected because of falling carbon, coal and gas prices. This morning, power prices in the UK are finding some support from the gas however, the slightly more moderating forecasts could be bringing a bit of weakness into prices. Spot prices are strong and remain supported as wind production and temperatures begin to fall starting tomorrow.

    Monday 5th February 2018 - Spot power prices made improvements across Europe and the UK on Friday, as cooler temperatures raised demand and renewable generation dropped. This morning, stock markets are down and commodity markets are also weak on bearish sentiment and on expectations for a warm up in temperatures next week. Power prices are lower in all markets following feedstocks like gas and coal to the downside. Support remains on the spot as the mercury dips to its lowest point this week, today.

    Tuesday 6th February 2018 - Power prices dropped yesterday in the UK following a fall in the UK’s NBP gas market and moderating temperatures in European weather forecasts. This morning, the sell-off continues as global equities markets head into melt down, coal and oil prices slip further, temperature forecasts improve increasing the certainty of a warm-up and wind power forecasts ramp back up. The net result is lower prices across all power products and periods.

    Wednesday 7th February 2018 - Power prices in the UK power made gains with NBP gas and a weaker pound. This morning, feedstock like coal and gas are moving in unison and much the same can be seen in the power markets. Prices are up in early trade action with the broader commodity complex and on a change in temperature forecasts to slightly cooler in the 10-15-day period. The market remains very sensitive to every change in the forecast runs and will continue to do so until the end of the season.

    Thursday 8th February 2018 - Power prices rallied across all markets from spot to longer dated curve products on gains in coal and gas, despite a sizable drop in oil on increased US production. This morning, gas and coal prices are being dealt lower on moderating forecasts and confidence in a resolution of the Forties pipeline outage. Prices are falling for the UK, Germany and the Nordics from spot to the back end of the curve. The far end of the forecasts suggest temperatures will remain around normal out until the end of the month, further risk is likely to be removed in temperatures remain around normal into March.

    Friday 9th February 2018 - Power markets took a beating yesterday across Europe and the UK falling with gas coal and oil. More mild weather and a pick-up in wind pressured the spot market. This morning, the UK power market is up with gas on the back of a short system and a few unplanned outages.

    Monday 12th February 2018 - Power prices made improvements in most markets on Friday as nervous weather watchers decided to hedge exposure into the weekend as two competing narratives left trades uncertain whether forecasts would be colder on Monday. Oil prices were hit when US rig counts were announced to have risen by 26 active rigs to almost 800 a sign that US production could begin to grow even faster. This morning, power prices are slightly softer in the UK with a dip in gas, while German and Nordic prices are softer on generally mild weather with no current signs of a feared arctic blast.

    Tuesday 13th February 2018 - Power prices were mixed yesterday in trade action, with the UK spot price out turning weak. The UK power curve rallied with gas. This morning, fuel inputs for power generation are all up, gas and coal have made gains in early trading driven by a colder outlook at the back of the forecasts coupled with drier conditions and a drop in wind power production. Carbon prices remain sturdy, stock markets and oil are mostly askew so power is trading weather and that is unmistakably bullish at the moment.

    Wednesday 14th February 2018 - Power prices jumped up yesterday, following feedstocks like gas for UK power and coal for German power. From this weekend wind power production is forecast to drop decisively below normal while solar should pick up some of the lost production, colder temperatures, around 3-5 degrees below normal for NW Europe and the UK show no warm up as of yet and traders are hedging themselves against the volatility. This morning, temperatures forecasts are bit milder in the mid-term while remaining very cold at the end of the 15-day period, never the less prices have eased back slightly in the spot and front month contracts while longer dated contracts have made minor gains in early trade action.

    Thursday 15th February 2018 - Power prices were varied yesterday, with the UK power market following NBP gas to the downside while German power fell at the front on mild weather and gained in the back on the move in coal. This morning, power prices are generally trending together across all markets following mild conditions to the downside in spot and on front contracts while the seasons and calendar products have made some gains on coal and gas moves to the upside.

    Friday 16th February 2018 - Power prices generally followed their respective main feedstocks yesterday, with a healthy dose of influence from a change in the weather forecasts towards warmer temperatures. This morning, a different day and a different weather forecast. Expectations have swung 180 degrees with current model runs predicting temperatures to plummet, talk of a polar vortex and colder conditions than records set back in 1979 are making the headlines. Most traders will be unlikely to hold or take short positions over the weekend given the volatility of the weather forecasts so the day will be punctuated with hedging and short covering.

    Monday 19th February 2018 - Power prices assembled on Friday, moving up with feedstock gains and on concerns of a protracted period of below normal temperatures. This morning, cold weather foreacsts have been confirmed from mid-week to the end of the 15-day period and the market has made further gains. The question for most traders is now how long the cold will last, with many talking about a blocking high which could keep the temperareatures below normla for many weeks to come, a possible repeat of March 2013.

    Tuesday 20th February 2018 - Power prices ascended yesterday following a sharp rally in the two most crucial feedstocks, gas and coal, which boosted prices in the UK. This morning, coal prices are mostly flat and the cold weather remains confirmed and in place, so German prices are modestly up at the front and mostly unchanged at the back, UK power looks much the same, since the development in gas, on the curve, is similar to coal. the Nordics are up more than their neighbour as the cold dry forecasts draws down hydro stocks.

    Wednesday 21st February 2018 - Power prices made gains in the UK yesterday on the back of cold weather forecasts and an upswing in the prices of the respective primary inputs, gas and coal. This morning, the power markets remain mostly supported with prices flat to slightly up at the very front ends of the respective curves while prices for contracts that make up the longer dated periods are trading at a very minor discount day on day. Coal has traded down a touch in thin volume while gas prices are slightly softer on the front season in early action.

    Thursday 22nd February 2018 - Power prices continued their climb yesterday following on gains in the gas market spot price and a steady uptick in power demand as we head towards what some are calling SNOW-pocalypse and the freeze of the century. This morning the weather forecasts are mostly unchanged, however the market remains very nervous buying an price dips and pushing prices back up to levels near yesterday's highs in the UK power market while German and Nordic power markets are trading down on weaker coal prices.

    Friday 23rd February 2018 - Power prices were generally frailer yesterday, trading down in Germany and in Nordics on a modest amount of profit taking during this bull-run and a small up-tick in wind output. The UK, by contrast, which derives most of its direction and a large portion of its power from natural gas was dealt higher with the NBP, however, the gains were greater in gas than in power. This morning, the NBP is soaring and UK power is will likely follow when traders get the confidence to put up a bid or offer.

    Monday 26th February 2018 - Power prices assembled across Europe moving with feedstocks, in the UK the rally in NBP gas boosted spot power prices by more than 5€. Improvements in coal were also strong but much over shadowed by the swings in gas prices and concerns over the weather forecasts. This morning, the markets have turned sharply, pulling a 180 degree turn in pricing with a change in forecasts towards a return towards more normal temperatures by next week. Wind power is expected to be above normal in major markets while solar is beginning to remerge into the supply mix with clear skies.

    Tuesday 27th February 2018 - Power prices were distributed lower on Monday after weather forecasts confirmed a warm-up late this week and into early next week. The change in tone for temperatures sent gas and coal spiralling downward taking longer dated power contracts in the UK. It was a mixed bag in the spot market where there were some gains and losses, however the moves were somewhat muted by increased renewable generation against the frigid temperatures. This morning, prices are mixed, gas has rebounded in the UK taking the spot and near-term curve products higher, with only minor discounts appearing on the calendar products in early trade action.

    Wednesday 28th February 2018 - Power prices encouraged with feedstock yesterday and in predictable fashion the rally in gas prices boosted prices for UK power. This morning we have hit record high (10-year) prices on spot gas and UK power is also up with this input, however not as much as gas due to strong wind power output. German power has not noticed the commotion in gas and UK power as prices have all been dealt lower with coal while the Nordics are up only modestly.

  • Market Comments March

    Thursday 1st March 2018 - Power prices were a varied yesterday, UK power followed gas gaining in the spot while losing on the curve. This morning, the weather continues to cause havoc on NW Europe and the UK new highs in spot gas prices filter through to power.

    Friday 2nd March 2018 - Power prices went confidently off in two directions yesterday with the UK power market roofing on record setting gas prices. Volatility was just in the spot with price changes on the curves being quite muted as attention was diverted from the longer dated contracts to the gong show at the front. This morning, prices are softer as gas and coal are coming off and the UK system is balanced. Temperatures have begun to warm-up and are expected to be close to normal by the weekend.

    Monday 5th March 2018 - Power prices increased in the UK on Friday following the rise in gas prices as the market feared for uncertainty over the weekend. This morning, prices are down across all markets as the value in the spot have been cut and forward prices for gas and coal have fell. Weather forecasts have been revised to levels around or slightly above normal for all of NW Europe but the coal weather has come with the cost of lowered storages of gas which leaves little flexibility in the case of more coal.

    Tuesday 6th March 2018 - Power prices were dealt lower in the UK on Monday following gas in the spot and weather for the longer-term value of the curve. This morning, UK power is a touch softer with gas while the Nordics are also slightly down on increasing precipitation in the latest forecast.

    Wednesday 7th March 2018 - Power prices rallied in all markets yesterday from the front month to the far end of the curve on a big lift in gas followed with gains in coal and oil. Warming temperatures kept the spot prices from going up but fear over a return to cold weather, hinted at in the forecasts has made the market very nervous. This morning, power prices are slightly softer in the UK as gas prices are mostly flat to slightly lower while a drop in coal and improved precipitation has pressured German and Nordic power more convincingly down.

    Thursday 8th March 2018 - Power prices progressed with fuels yesterday, marking up with UK gas. This morning, the market is up in all regions following on gains in gas and coal while oil and temperatures are mostly unchanged. Gains in carbon have been steady which has supported the power market as traders believe more resolution is coming for the credit system.

    Friday 9th March 2018 - Power prices rallied yesterday across Europe and the UK on the back of fears of another polar vortex and extreme weather event. UK power was hit hard to the upside with both the fear over cold weather and a rally in the gas market. This morning, the market continues to buy up the front end of the curve including spot prices covering risk ahead of the weekend. Coal prices are down while gas and carbon continue to make gains providing more upward lift to power prices.

    Monday 12th March 2018 - Power prices improved across all markets on Friday as traders lifted contracts ahead of the weekend and concerns over an impending cold snap. Prices moves were more distinct at the front of the curves on the April and Q2-18 contracts. This morning, the cold snap has been confirmed and the market has moved sharply higher. Late season cold snaps can tend to both surprise and to cause some of the most pronounced reactions as flexibility in the power markets and commodity supplies can become strained by this time of the year.

    Tuesday 13th March 2018 - Power prices rallied in the UK yesterday with gas and fear of cold weather. This morning, the forecasts are in agreement concerning a sharp drop in temperatures, however, they are now signalling a reasonable quick warm-up in the UK while on the continent the temperature may rise a bit more slowly. Gas and coal prices are bot down slightly in early trade, making prices for power in the UK German and the Nordics all a little bit more affordable today than yesterday.

    Wednesday 14th March 2018 - Power prices fell yesterday with changes in the weather forecasts towards a milder outlook, coupled with a drop in gas prices. Support could be found for power from a slight gain in coal prices coupled with strength in carbon prices. This morning, power prices are down with coal and gas as well as on the back of more moderating weather forecasts which suggest the cold snap will be short lived.

    Thursday 15th March 2018 - Power prices fell in the UK yesterday following on the heels of a drop in NBP gas prices and warmer forecasts. This morning, the power markets are a touch softer across all of Europe and the UK on softer coal prices and a confirmation across all forecasts that the cold snap will be relatively short lived. Despite the cold weather, the market is taking solace in the forecasts for a surprisingly high level of wind output at the same as the cold snap which is easing the nerves of traders.

    Friday 16th March 2018 - Power prices were up in the UK yesterday following on the expected drop in temperatures coupled with a rally in gas prices. This morning, markets are up with gains in gas and slightly cooler forecasts, a return to more normal weather is expected by late next week, however a return to normal or above normal temperatures are not to be expected. With the exception of gas, underlying feedstocks and renewables are robust and are not providing much support to the markets, the moves are all about the temperatures.

    Monday 19th March 2018 - Power prices in the UK were dealt lower on Friday, following the sell off in gas prices and the weakness in coal and carbon prices. This morning, power prices are trading around flat to the previous close as traders assess what the coming 2-week forecasts will bring and if winter is now behind us. Renewables are performing well during the cold and are expected to remain around normal in the weeks to come.

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