Weekly UK Insight - 1 July 2019


p/therm 21 Jun 19 28 Jun 19 Change
Day-Ahead (DA) 28.00 24.30 -13.2%
Aug 2019 27.84 25.65 -7.9%
Winter 2019/20 51.36 49.85 -3.0%
Summer 2020 45.11 44.00 -2.5%

Source: Reuters

The UK’s Day-Ahead gas price fell 13.2% to 24.30 p/therm, as ample supply, high storage levels and low demand weighed on the market.

Britain’s total gas imports from Norwegian pipelines were around 74 mcm/d last week, but could rise. Norwegian flows to Britain are expected to increase next week due to the end of maintenance at the Troll gas field.

The high supply of gas means that there is just one further scheduled delivery of Qatari LNG into Britain in the next two weeks.

In addition, strong renewable generation means that demand for gas to be used in power production is relatively low.

However, an unexpected outage at Norway’s Nyhamna gas processing plant over the weekend is cutting output by 18 mcm/d, and is expected to impact flows until the end of the week.

Winter 2019/20 gas prices fell 3.0% to 49.85 p/therm, as a comfortable long-term UK supply-demand gas balance takes pressure off prices.

European gas storage levels are nearly 71% full. Europe’s total gas storage capacity is around 98 bcm, but the current rate of injections means that Europe is on schedule to have a massive of 13 bcm of surplus gas that can’t be placed in storage ahead of the winter gas season.


Weekly UK Insight 1 July 2019
Source: Reuters


£/MWh 21 Jun 19 28 Jun 19 Change
Day-Ahead (DA) 37.21 35.26 -5.2%
Aug 2019 38.73 37.63 -2.8%
Winter 2019/20 55.97 55.08 -1.6%
Summer 2020 48.54 48.26 -0.6%

Source: Reuters

Day-Ahead power prices fell 5.2% to £35.26/MWh responding to a growth in wind output forecasts for the coming week and also driven lower by spot gas.

Winter 2019/20 power prices dropped 1.6% to £55.08/MWh, reflecting declines in UK gas and coal prices.

However, rising oil and carbon stopped UK forward power prices from dropping further, with German power also providing significant support.


Weekly UK Insight 1 July 2019
Source: Reuters


$/bbl 21 Jun 19 28 Jun 19 Change
Brent Crude Sep 19 65.20 66.55 2.1%

Source: Reuters

Brent crude oil prices rose 2.1% week-on-week to $66.55/bbl, buoyed by U.S. government data that showed a larger-than-expected drawdown in crude stocks as exports hit a record high, and surprise drops in refined product stockpiles.

The EIA said crude inventories fell 12.8 million barrels last week – the most since September 2016 – far surpassing expectations for a decrease of 2.5 million barrels.

However, OPEC and its allies look set to extend oil supply cuts this week at least until the end of 2019 as Iran joined top producers Saudi Arabia, Iraq and Russia in endorsing a policy to continue cuts for at least another six months until the end of 2019.


Weekly UK Insight 1 July 2019
Source: Reuters

Exchange Rates & Economics

£/$ 21 Jun 19 28 Jun 19 Change
GBP/USD 1.2740 1.2693 -0.4%

Source: Reuters

The value of the Pound Sterling fell versus the U.S. dollar and euro as investors were anxious about the possibility of a no-deal Brexit should Boris Johnson win the Conservative party leadership race and replace Prime Minister Theresa May as prime minister.

Investors have been reluctant to take big positions in the pound amid the Conservative party leadership contest, with the result set to be announced on 22 July.

Johnson, the frontrunner, has said Britain will leave the European Union on Oct. 31 deal or no-deal, but he has also said there is only a one in a million chance of leaving without an agreement in place.


Weekly UK Insight 1 July 2019
Source: Reuters

Regulatory and Market News

UK becomes first major economy to pass net zero emissions law

The UK last week became the first major economy in the world to pass laws to end its contribution to global warming by 2050.

The target will require the UK to bring all greenhouse gas emissions to net zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels.

The UK has already reduced emissions by 42% while growing the economy by 72% and has put clean growth at the heart of our modern Industrial Strategy. This could see the number of “green collar jobs” grow to 2 million and the value of exports from the low carbon economy grow to £170 billion a year by 2030.

Energy and Clean Growth Minister Chris Skidmore said:

  • The UK kick-started the Industrial Revolution, which was responsible for economic growth across the globe but also for increasing emissions.
  • Today we’re leading the world yet again in becoming the first major economy to pass new laws to reduce emissions to net zero by 2050 while remaining committed to growing the economy – putting clean growth at the heart of our modern Industrial Strategy.
  • We’re pioneering the way for other countries to follow in our footsteps driving prosperity by seizing the economic opportunities of becoming a greener economy.

The UK’s 2050 net zero target — one of the most ambitious in the world — was recommended by the Committee on Climate Change, the UK’s independent climate advisory body. Net zero means any emissions would be balanced by schemes to offset an equivalent amount of greenhouse gases from the atmosphere, such as planting trees or using technology like carbon capture and storage.

LINK: Gov – UK net zero emissions law by 2050

EDF celebrates key milestone as base of first Hinkley Point C nuclear reactor completed

The base of the first nuclear reactor at Hinkley Point C has been completed in what is being described as “its biggest milestone” so far.

The reactor, known as “J-Zero”, now paves away for the construction of the nuclear buildings above ground can commence.

The final 9,000m³ of concrete poured onto the base was the largest concrete pour in the UK – more than the record set by the Shard in London.

Reinforced with 5,000 tonnes of Welsh steel, the base has been under construction by the UK-French joint venture of Bouygues-Laing O’Rourke for six months.

A spokesman for EDF Energy said the “good progress and efficiency improvements” means that the second Hinkley Point C reactor will be completed in June 2020.

Britain’s first nuclear power station in more than 20 years will provide low carbon electricity, a move that a spokesman said will “play a vital role in helping the UK tackle the climate change crisis.”

Hinkley Point C will supply the UK with low carbon electricity to meet seven per cent of the country’s energy needs. EDF Energy say the station is on course to be active towards the end of 2025.

LINK: EDF – Hinkley Point C update


Disclaimer: These views and recommendations are offered for your consideration and Beond makes every effort to ensure that the data and information in this report is accurate. However, due to the volatile and unpredictable nature of the energy markets, Beond cannot guarantee the accuracy of both the information and the recommendations provided. Beond does not accept any responsibility for errors or misstatements, or for any direct, indirect, consequential or other loss arising from any use of this information and/or further communication in relation to this information.