|p/therm||11 Apr 19||18 Apr 19||Change|
The UK’s Day-Ahead gas price slid 18.1% to 33.10 p/therm, close to a two-year low, as a planned shutdown of the IUK pipeline between Britain and Belgium coupled with warm temperatures and strong wind output created an oversupply.
The IUK pipeline, which transports gas between Europe and Britain, started its annual shutdown for maintenance on 21 April. The pipeline can both export and import gas. As a result, injections into UK gas storage facilities increased over the long Easter weekend.
Temperatures are also warmer than previously expected and strong wind generation reduced demand for gas. Strong power production from wind turbines typically reduces demand for electricity from gas-fired power stations. National Grid data showed Gas demand in Britain was forecast at 165 mcm and flows at 203 mcm/d, leaving the system oversupplied by around 38 mcm.
Britain is expected to receive nine LNG tankers over the next two weeks, supporting UK gas system supply as temperatures fall in line with seasonal normal levels over the same period.
Winter 2019/20 gas prices fell 2.5% to 56.76 p/therm, driven lower by the well-supplied prompt market. Milder temperatures combined with strong gas supplies should help Britain’s storage facilities easily fill to capacity over the next five months ahead of winter delivery.
Volatile prices over the last quarter have been driven primarily by gas supply concerns on the prompt market. With warmer weather reaching Britain over the Easter weekend, long-term supply risks will continue to subside.
|£/MWh||11 Apr 19||18 Apr 19||Change|
Day-Ahead power prices fell 3.3% to £44.62/MWh, in response to a massive decline in spot gas prices. Peak wind power generation is also forecast at 8.4GW on Tuesday and is expected to rise to 9.6 GW on Wednesday.
Winter 2019/20 power prices slid 2.0% to £59.60/MWh, tracking losses in UK gas and European power prices, as well as lower carbon and coal markets, which reduced the cost of gas and coal as input fuels for power production.
UK POWER BASELOAD
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|Brent Crude Jun 19||70.83||71.97||1.6%|
Brent crude oil prices continued their steady climb rising 1.6% to $71.97/bbl, as the United States stepped up pressure on Tehran by announcing an end to the waivers that have allowed major oil importing nations to buy from Iran. The decision could have a fundamental impact on oil markets and raises questions about the ability of other oil producers to fill the gap.
Iran has been producing about 2.5m bpd of crude oil and has exported up to 1.3m bpd for the past five months. Most have gone to five major buyers: India, China, South Korea, Japan and Turkey.
BRENT CRUDE OIL – MONTH-AHEAD
|£/$||11 Apr 19||18 Apr 19||Change|
The value of the Pound Sterling is at the mercy of Brexit-related news, sliding versus both the U.S. dollar and euro last week.
There is no economic data expected today, which could be positive for the Pound. However, over the next few months any negative headlines or a breakdown in talks could see the Pound move lower.
Despite Theresa May’s efforts, Britain is scheduled to hold elections for representatives to the European Parliament between 23-26 May 2019.
EXCHANGE RATE – GBP/USD (£/$)
Ofgem launches consultation over plans to simplify Capacity Market
Ofgem has launched a consultation over plans to simplify UK Capacity Market (CM) rules and boost secondary trading in contracted capacity.
In particular the regulator wants to simplify prequalification, allowing applicants to delay submission of certain data to reduce the risk of rejection ahead of the competition.
It also wants to reduce the burden on new-build capacity applicants having to supply independent expert reports ahead of delivery year.
And it wants to create a more open and liquid secondary trading market, opening up the market from the T-4 (four year ahead) auction and reducing barriers to participation.
The CM is suspended following a ruling by the European Court last November that the European Commission should have carried out an in-depth investigation into its design.
Following the judgment, the UK government postponed auctions for delivery years 2019/20 and 2022/23 and suspended all payments under the scheme.
The UK Government is to hold a replacement T-1 capacity market auction 11-12 June for delivery in Winter 2019/20, making any agreements conditional on the outcome of the EC’s formal investigation. The auction has a target capacity of 4.6 GW.
Energy UK reports more than 600k electricity customers switched supplier in March
According to latest figures from trade association Energy UK around 615,503 customers changed electricity supplier in March – an increase of 29% compared to the same month last year.
That brings the total number of switched to more than 1.4 million this year so far – up 12% compared to the same period in 2018.
Lawrence Slade, Chief Executive of Energy UK said: “It’s very positive to see increasing numbers of customers continuing to switch and engaging in the market to make sure they’re on the best deal for them – and of course, this number doesn’t include those customers who choose to move to a new tariff with their current supplier, which would add many more thousands of households.
“It’s most likely that this month’s increase is in response to the recent price cap rise announced by Ofgem, showing how the price of electricity and gas is affected by variable costs – the vast majority of which are out of suppliers’ direct control. While we hope the engagement levels remain high, we can only really assess the cap’s effect on switching over a longer period of time when it might fall as well as increase.”
Latest statistics from the Energy Ombudsman revealed switching has risen up the ranks in terms of most energy complaints and is now second to problems with billing.
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