Energy Market Update – 21 May 2015

21 May 2015

Gas

Prompt contracts reduced this morning due to expectations of warmer weather for Friday. The system remains oversupplied due to the continued high LNG send-out, with three vessels expected over the next week. This bearish pressure on prices has also been seen on the near curve, further influenced by the strong pound in relation to the euro. Further out on the curve has seen similar movements despite gains on crude oil. Losses are being limited by the demand for gas in the power sector due to low wind generation.

Day Ahead is currently offered at 43.25p / therm, a loss of 0.30p / therm from its previous settlement, with Winter ’15 offered at 48.50p / therm (0.11p / therm below previous settlement), and Summer ’16 is offered at 43.95p / therm (0.01p / therm below previous settlement).

Power

Day Ahead contracts opened up down this morning with temperatures set to rise back up to seasonal norm levels tomorrow. This along with the expected increase in wind output tomorrow has added to the downward pressure. Despite the bearish sentiment prices on the curve opened up relatively flat this morning due to poor liquidity. Similarly further out on the curve has remained fairly flat despite bullish pressure from the wider fuels market, with Brent Crude and coal strengthening.

Day Ahead is currently offered at £40.50 / MWh, a loss of £1.05 / MWh from its previous settlement, with Winter ’15 offered at £45.90 / MWh (a fall of £0.08 / MWh), and Summer ’16 offered at £42.58 / MWh (a loss of £0.01 / MWh from previous settlement).

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