Head of Sales Trading, Fanos Shiamishis, reports on energy market activity, covering the period 27th June – 3rd July 2023. On our end-of-day pricing tool, The Source, we published an in-week high of £128.62/MWh for the Winter-23 seasonal power price on 27th June. In this blog, Fanos shares the market news and updates from the last week. 

UK Power front season opened on Tuesday with an £8 bid/offer spread, but eventually traded lower than the previous day at £126/MWh. Market continued to trade down, reaching a low of £125.50 only to rally in the last hour of the day to close higher day on day.

The N2EX day ahead market settled relatively unchanged on Wednesday, reflecting consistently high wind generation levels. Increased confidence in France's ability to meet this Winter’s power demand, with nuclear capacity expected to increase to 30-35GW.

On Thursday prompt prices saw a soft opening with higher wind generation across the continent, softening expectations in gas demand for generation. However, as the day progressed, prices rebounded, particularly in month ahead and Q3 contracts. It appeared that shorts were closing out their positions, providing additional support to the prices during the final trading hour.

Overall, the fundamentals point to strong supply in the market, with Centrica announcing an expansion in storage capacity at Rough and ongoing injections throughout the summer. The scarcity of UK power quotes resulted in an imbalance between the bids and offers, with significant increases in demand and price support led by shorts aiming to limit weekend risk exposure.

The trading range for August within-day gas prices was 15 ppth, while for Winter-23 it was 11 ppth. Initial worries about decreased LNG deliveries and a potential surge in air-conditioning-related demand were balanced out by stable supply and a slowdown in economic growth. The UK gas system had excess capacity due to increased flow from Norway. Liquidity on the UK power curve was relatively low, influenced by upward movements in the NBP and UKA rallies.

Key news on Monday/Yesterday with the UKs Department for Energy Security and Net Zero (DESNZ) publishing their joint response on the consultation in Developing the UK Emissions Trading Scheme: Full Report