Industry News

• Marketwatch

  4 Jan 2010

  DECEMBER 2009:

  
  The gas markets were in a bullish mood in December as tighter margins pushed prices higher on the near market. Low temperatures in the week 30th November pushed up demand. Forecasts for the Christmas period added further upward pressure. Imports from Norway declined during the week with technical failures, while LNG supplies ran low, leaving margins tight at the end of the week. The weeks 7th and 14th were also influenced by bullish fundamentals as demand remained high, prices on the US Henry Hub increased and weather conditions worsened. Ample supply in the week 14th December widened margins ahead of forecast snowfall, while demand remained high. Price gains in the week 21st December were restricted by LNG supplies and the closure of many public building over the festive period. On the whole the system coped well. However, the occasional technical failure and reduced flows from Norway in the week 28th December left the system short. Within day edged up to 34.25p/therm while day ahead closed up at 35.60p/therm with high demand. January 2010 and February 2010 ticked up, ending at 33.65p/therm and 33.75p/therm respectively. Seasonal contracts edged up with movement in associated commodities, as Summer 2010 ended 32.65p/therm and Winter 2010 at 48.85p/therm. UK electricity prices increased during December following bullish fundamentals influencing the markets. Demand remained high with low temperatures, while a number of outages pushed margins tighter. Further gains were restricted by ample supply, while maintenance to the interconnector in the week 30th November also restricted gains as surplus became stuck in the system. Wind generation picked up in the week 7th December, adding much-needed length, while low outage rates also pressured prices. In the week 14th December, prices edged up on gas, while demand remained high, outages tightened the system and low temperatures affected most of the UK. The final two weeks saw a slight downturn in demand with the closure of many public buildings and decreased production at UK manufacturing sites over the Christmas period. Low temperatures and snowfall added pressure to the system while further increases can be attributed to rising gas. Day ahead edged up to 35.50£/MWh following increased demand. January and February 2010 shed value closing at 36.85£/MWh and 36.60£/MWh. Seasonal contracts edged up as Summer 2010 ended 36.65£/MWh and Winter 2010 at 45.15 £/MWh.

  
  NOVEMBER 2009:

  
  Bearish sentiment gripped gas markets in November as prices edged down across the board. Margins widened with higher temperatures throughout the UK and lower consumer demand. In the week 2nd November prices edged down on the prompt due to warmer weather forecasts and falling prices on the US Henry Hub, which pressured prices on the curve. In the week starting 9th November, expectations of LNG deliveries and wider margins placed further pressure on gas contracts while flows from Belgium, Holland and Norway remained ample. Ahead, prices edged up on oil supply concerns following poor weather in the Mexican Gulf. The week of 16th November was bullish on the whole, with prices ticking up on high demand and supply shortfalls, while the system closed short on the Friday. The final brought with it further price increases with high continental prices, while contracts edged down on bearish oil data and reports of financial instability in Dubai. Within day and day ahead edged up towards the end of the month with low temperatures and high demand on the continent, closing at 26.75p/therm and 26.95p/therm respectively. December 2009 edged down to 26.70 p/therm while January 2010 shed to close at 29.70 p/therm. Summer and Winter 2010 both edged down with bearish fundamentals, closing at 29.20 p/therm and 44.10 p/therm. Bearish sentiment was evident within the UK electricity markets during November as margins remained wide for most of the month. In the first week, a fall in the prompt was seen as contracts fell with the gas, while ample supply added further pressure. In the week 9th November, higher than expected temperatures and lower UK demand pushed prices down. The following week, sustained low prices on the continent forced the UK–France interconnector into import mode, weighing on UK prices and widened margins. Poor weather forecasts and a number of outages failed to add upward pressure to prices. In the final week, prices edged lower on high supply confidence, warmer weather forecasts and low outage rates, while a high export level failed to push prices higher. Day ahead prices edged down on the month closing at 32.10£/MWh. December 2009 closed at 33.60£/MWh, while January 2010 edged down to 34.60£/MWh. Seasonal contracts ticked down on weaker gas, both in the UK and US, and softer oil. Summer and Winter 2010 ended at 34.80£/MWh and 42.30£/MWh respectively.

  
  OCTOBER 2009:

  
  Prices edged up across the gas markets during October as margins tightened. Bullish fundamentals took hold of the markets as both temperatures and demand lowered across the UK. In the week 28th September, price increases were restricted with increased LNG deliveries and wide margins. Seasonal contracts edged down with the US Henry Hub and softer oil. In the week 5th October, reduced Norwegian flows and outages in the North Sea pushed up prices, while in the UK technical issues restricted flows from a number of terminals. Further, prices edged with stronger oil and Henry Hub prices. In the week 12th October, prices increased on lower temperatures and North Sea field outages, while bearish fundamentals pressured prices in the week 19th October as LNG cargoes weighed on the prompt. The final week brought with it further price increases with renewed supply concerns in Norway, reduced flows from the North Sea and warmer weather for the week ahead. Within day increased to 27.00p/therm while day ahead gas closed up at 28.85p/therm on tight margins. November 2009 edged up to 32.05p/therm while December 2009 closed up at 37.05p/therm. Seasonal contracts increased as summer and winter 2010 closed at 37.80p/therm and 54.60p/therm respectively. UK electricity prices also edged up during October with higher gas prices and increased prices on the continent. In the week 28th September, low temperatures pushed prices high, while the interconnector exported to Belgium throughout the week. In the week 5th October, outages at many UK facilities added upward momentum, while high continental prices continued to push UK prices higher. The week 12th October brought further price increases with higher gas prices, while in the week 19th October further increases were restricted due to a rise in nuclear generation, coupled with continued maintenance on the interconnector adding length to the system. In the final week, the prompt opened softer with increased nuclear generation. However, later in the week bullish sentiment returned as prices increased with gas and tighter generating margins. Day ahead ticked up to 33.75£/MWh with comfortable margins, while November 2009 edged up to 38.35£/MWh. Further, summer and winter 2010 edged up with oil, closing 39.40£/MWh and 48.95£/MWh respectively.

  
  Sources: Platts and Argus Media