Here’s our latest summary of activity on the UK and world electricity and gas markets. For more detail, please sign up to receive our free monthly newsletter, Energy Brief.
Gas prices for immediate (within-day) delivery have just rocketed to their highest level since March 2006, as a power failure at Norway’s Nyhamna gas terminal, which processes gas from the giant Ormen Lange field, curtailed output there by 53 mcm/day, reducing gas imports into an already supply-constrained UK market. Unplanned outages at several UK fields, including Alwyn North, also contributed to the supply squeeze. Within-day prices soared to 115 p/th, while Day-ahead prices hit 89 p/th, their highest level since February 2012 – just days after the market was left reeling by another, smaller, price spike which had already pushed values to 12-month highs (the trigger that time being freezing UK weather).
Longer-term levels have also edged higher as supply sensitivities have spilled forward, in spite of a sharp 6% tumble in oil prices prompted by a stream of gloomy global economic news and statistics.
Prices on the short-term UK power and gas markets surged at the start of March, as a storm-related power cut at a major Norwegian gas field slashed gas imports. This price spike came just a week after another sharp rally in prices which had already seen values leap to a 12-month high.
The first run-up was caused by a further drop in temperatures. Although the UK power market has brushed off recent cold snaps this one proved hard to ignore, as poor demand increased both in the UK and in France, bumping up exports and gas prices roared higher too. Day-ahead prices hit £58.5/MWh as a result, before retracing soon after – only to be catapulted to even greater heights on March 4th as the Norwegian outage was announced, reaching £63.5/MWh. Longer-term prices have risen too, but by significantly less, with April Annual ’13 and October Annual ’13 the only Annuals to see gains of more than £1/MWh over the last fortnight.
The increases seem to be more on the back of short-term nerves and gas market gains than anything else – as oil, coal, Continental power and CO2 emissions markets have all registered losses over the same period.