CCS Weekly Market Report

This week:

Like last week, both gas and power prices started the week off at lower levels but as the week progressed prices moved higher. Contracts further out have seen less pronounced increases.

Gas

Gas demand has dropped down this week due to the warmer temperatures that we have experienced across the UK this week.
European storage has picked back up again this week and now above 62%. The increased temperatures have helped to reduce the need for gas withdrawals
Norwegian flows to the UK have dropped again this week owing to the continuation of the summer maintenance programme. Lower flows are likely to persist over the coming weeks
LNG send outs and UK storage withdrawals have stepped up again this week to help aid the deficit from the drop in Norwegian gas but this was limited by lower demand

Power

Overall power demand is largely in line with last weeks demand
Wind generation has almost doubled week on week resulting in a significant drop in power sector gas demand.
Solar generation has increased a small amount this week but we should start to see greater contribution moving forward
As mentioned above power sector gas demand has dropped off this week. This has helped to limit support for prompt prices as overall gas supply in the UK has been lower this week
We have also seen interconnector imports step up this week, reducing the need for higher gas fired power generation
Carbon has continued to be a driver for power and gas prices this week, lending significant support to prices on Thursday

Wider Commodities

Brent has hit a 7 week low this week, trading below $84. Stability in the ongoing Middle Eastern situation has helped reduce some risk baked into the Oil price, with hopes of an Israel-Hamas ceasefire in the pipeline. Data out of the US has also helped to pressure Oil lower, with US sock data showing a surprise increase this week and US production data for February showing a significantly higher figure than January (the largest month on month increase for three and a half years).
US economic data suggested a slow down
this week adding further bearish pressure,
although US crude stocks should an
unexpected larger drawn on stock adding
some bullish sentiment. Additional support
from Oil workers in the North Sea that are
currently threatening strike action which
could disrupt global supply.

Carbon has continued to be volatile again this week and despite starting the week off lower, the EU price managed to soar on Thursday gaining>€4 within day. Some traders are pointing the blame for the increases towards Gas but financial traders still look to be in the driving seat when it comes to the short, sharp price moves. Despite price gains this week, the fundamental outlook for Carbon remains bearish. Strengthening Carbon has added support to both gas and power prices this week.

Coal started the week tracking lower before retracing in the latter half of the week, moving above last weeks closing price. Mixed drivers for coal this week with support for prices coming from Australian sellers holding onto cargoes due to an expectation of increased demand and soaring temperatures across several Asian countries increasing demand for both Coal and LNG. Increased supply could be seen from Russia as the Govt. has decided to temporarily remove the export duty on thermal coal, resulting in more buyers.