Weekly Energy Market Update - 07/10/2019
7 Oct 2019

Commodity

Unit

Settlement Price

Change Since 01 Jan 19

Change on Week

UK Gas NBP Nov 19

p/therm

41.90

-31.32%

-4.62%

UK Gas NBP Summer 20

p/therm

43.14

-11.05%

-2.88%

UK Gas NBP Winter 20

p/therm

52.63

-7.98%

-2.08%

UK Power Base Nov 19

£/MWh

48.62

-21.57%

-3.30%

UK Power Base Summer 20

£/MWh

46.50

-9.74%

-3.93%

UK Power Base Winter 20

£/MWh

53.57

-6.87%

-3.06%

Carbon EUA Dec 19

€/tonne

22.94

-7.50%

-9.90%

Oil Brent Crude Nov 19

$/barrel

58.37

5.59%

-5.01%

 

Last week saw most of the energy complex soften as bearish fundamentals and technicals took hold. Front month gas lost just over 2 p/therm through the week trading down to near annual lows. There was little in the way of bullish news to provide the contract with any support and the mix of a strong supply and storage outlook, buoyed by LNG, and weaker demand, fuelled by economic fears, pulled pricing down.

UK Power pricing also dropped with the front month baseload contract posting a loss of £1.66/MWh over the week and the near-curve seasonal contracts posting larger losses closer to the £2/MWh mark. Power pricing would have felt pressure not only from bearish gas but also weak carbon. Dec-19 EUAs lost just over €2.52/tonne over the week, trading down to levels last seen 6 months ago. Carbon pricing was pressured by weak economic sentiment, weaker gas pricing and technical selling pushing the contract down through several key support levels. 

Brent Crude also traded lower over the week with the front month future losing just over $3/barrel, the commodity’s largest loss since July. The release of weak economic data across both manufacturing and services in major economies weighed heavily on crude pricing and the return of full Saudi production added further pressure.

This Morning’s View
This morning has seen a continuation of last week’s softening in the UK gas market. Front month gas opened almost 1 p/therm lower than Friday’s settlement and has since lost a further 0.62 p/therm. This has seen the contract break through multi-year contract lows painting a bearish picture, with little to offer in terms of technical support. National Grid is reporting the NTS to have opened c. 10mcm long with strong Norwegian and LNG output from South Hook currently sitting at 43.07 mcm. This length will be putting pressure on the prompt and near-curve contracts as will strong forecasted within-day wind output. 

UK power could open lower in line with weaker gas pricing across the front of the curve. Carbon pricing is so far holding up, having only traded down €0.06/tonne at the time of writing. However, with weakness in gas and power pricing and technical sellers in the market we could see EUAs slide lower over the day. Front month Brent Crude is currently trading sideways.

All in all, after a week of significant losses across the energy complex it is difficult to drum up much interest in bullish sentiment for near-curve contracts. This month, as the Winter shoulder month, will be important in setting expectations for upcoming winter pricing and volatility should be expected around any revisions to longer-term temperature forecasts, significant changes in storage levels and any shifting in the macro-economic outlook.
 

Market Report Disclaimer 
The information provided in this market report is intended for Brook Green Supply Limited clients and subscribers only. The content is provided and intended for general information purposes only. All pricing stated in this market report is indicative, at the time of writing, and may not be attained in trading at any time after report publication. For the avoidance of doubt, Brook Green Supply Limited does not represent or endorse the accuracy or reliability of any of the information or content, expressed or implied, nor are we acting in any capacity as a fiduciary to you. Recipients of this market report must not rely on the information and are advised to take any necessary steps to validate such information, independently assess the economic risks and merits and make your own assessment, or appoint appropriate advisors, on any legal or tax consequences before acting upon it. Under no circumstances will Brook Green Supply Limited have any liability for any loss or damage caused by dependence on any information contained within this market report. Please contact our execution and solutions desk via tradingdesk@brookgreensupply.com for further information. 
 
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