Prices firmed up earlier in the week with Day Ahead increasing to £47.30/MWh (up £1.25/MWh from Friday’s close).
This softened significantly as the week progressed, with an increase in wind generation and a well-supplied gas system keeping prices supressed. Yesterday gas demand in the UK fell to its lowest point so far this year, which combined with softening coal prices has driven prices down on the near curve. Day Ahead now sits at £43/MWh, down over £4/MWh since the star of week.
The losses were limited on the far curve however, as relatively strong oil and carbon prices impacted the power market. Summer-14 and Summer-15 prices remained consistent in light of this, due to poor liquidity brought about by the school half term and many traders being away from their desks.
If the system remains long and weather remains above seasonal norms (as expected) then the near term markets will remain in a bearish mood. There are 2 LNG cargoes due to dock in the coming weeks further supporting the healthy UK storage supplies.
Market opportunities to improve the overall position for the coming summer through unlocking/relocking demand will be considered.
The curve further out is now finding support from Oil and Carbon after the recent falls since the turn of the year, however as the bullish pressure is limited and gas continues to fall this should partly be reflected in the power rates.