Posted on: 14/05/2024
VP Trading, Fanos Shiamishis, reports on energy market activity, covering the period 7th May – 13th May 2024. On our end-of-day pricing tool, The Source, we published an in-week high of £64.52/MWh for the Summer-26 seasonal power price on 10th May. In this blog, Fanos shares the market news and updates from the last week.
UK Gas & Power: Flipping Forecasts Whipsaw UK Energy Prices in Two-Way Trade
Tuesday saw the UK gas system oversupplied in the morning amid forecasts for above average temperatures over the next few days. Gas opened higher as total renewable output was lower, with wind generation around 2GW and expected to peak at 5GW on May 9th. There was limited interest across the UK power curve, with only 34MW and 23MW trading in the Winter 2024 and Summer 2025 contracts respectively, while front-month and quarterly products saw a bit more volume.
On Wednesday, European gas prices edged down as the supply outlook remained comfortable with storage at 64% full and warmer weather in the latest forecast. UK power liquidity was thin, with only the front four seasons trading slightly lower, following the weakness in gas. Day-ahead N2EX cleared £5/MWh lower driven by softer NBP gas and expectations for high wind generation. EUA carbon prices ticked up partly due to the absence of an auction on Thursday's public holiday across Europe.
Thursday marked an up day in the markets. The UK gas system was oversupplied, but updated forecasts for next week indicated colder temperatures than previously expected, though with increasing wind output. UK power rallied following gains in gas and carbon, with over 500MW of the June 2024 contract trading as the most actively traded product.
On Friday, clean spark spreads for front-month, quarter and season contracts opened strongly with keen bids exceeding offered volumes. However, by the afternoon prices had retraced, liquidity dried up, and the earlier gains were more than offset in a bearish session.
European gas eased lower to start this week as temperatures held above average, Norwegian pipeline flows increased, and European gas stocks were last seen at 65% full. UK power followed the broader downtrend in gas and carbon, though liquidity was low apart from the front season baseload contract.