Energy prices update

Posted on

December 13, 2017

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Both oil and gas prices rose after an explosion in Austria coincided with the ongoing closure of the Forties oil and gas pipeline and a myriad of unplanned outages in the North Sea.

One person was killed and 21 injured in the blast at the Baumgarten site in Austria, which handles 10% of Europe’s gas requirements. Within day and day ahead prices were affected by reduced gas flows.

Norwegian operations impacted within day price as the massive Troll field extended the volume impact (from 20mcm to 60mcm) and duration, from a few hours to a few days, of its external power supply issue, causing issues at two gas fields, taking over a further 20mcm out of the mix.

According to SSE, the UK power system is looking well supplied with supporting wind generation, cheaper gas and coal-fired plant, and as expected prices are off.

Thursday and weekend base contracts last traded lower than the close, 85p and 35p respectively, while next week is currently holding a £2.00/MWh premium on the offer but yet to trade.

Front month last transacted at a £2.55/MWh discount, with Q118 not far behind at a £1.85/MWh drop. Seasons closed yesterday at a slight loss and are currently priced lower still.

SSE advises that “a perfect storm occurred yesterday” for those with a long position, the sell-off to any short covering seemingly quite profitable as prices rose, with day on day gains once again for the prompt and near.

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Power markets across the Europe were up in response to gas supply problems and rising API2 coal, with the UK prompt spiking massively, while the far curve also followed the NBP, but this was bearish. Strong wind forecasts did little to suppress Wednesday’s baseload lift – up £14.75 from the day before, and Jan-18 increased £3.70/MWh (£3.20/MWh above Mar-18 gains).

Brent crude rebounded overnight, however, up 80¢, as data indicates large draw in US reserves with stockpile info anticipating a 3.8 million barrel drop along with militant action at two sites in Nigeria and US-imposed sanctions against Iran.

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