The UK enters another brief cold spell, but nothing like the duration or strength of the one in December. The next three days or so will be cold, with tomorrow (Tuesday) the coldest at 5 degrees below seasonal temperatures.
It might come as a surprise then to hear that the markets are continuing to sell off, such is the strength of the bearish momentum and news. Front month Feb is down over 10% this morning on NBP, at 145p/therm, while power trades at £164MWh.
The far curve is showing weakness too. W-24 is down to 157p/therm, while W-24 power is currently untraded. The strong backwardation in the market we saw all last year has evaporated. In fact, the market has flipped recently. We are now in a state of contango, where prices are typically more expensive further out. The contango is very week on Power, virtually flat, but we are seeing around an 11% premium on gas 24m over a 12m contract currently.
It remains to be seen if the markets remain in the new curve state, but we are seeing short term risks drop off, particularly as we start to exit this winter, and into the Spring season.
Good pace is being made with Germany’s floating LNG terminals. The next facility is expected to begin operation soon at Brunsbuttel. It means 3 of the 6 terminals will be completed soon, with the other 3 expected to be fully delivered this year.
How the market has opened each day:
DAY AHEAD PRICES | Gas (pence per therm) | Electric (£ per MWh) |
09/01/2023 | 171.00 | 127.25 |
10/01/2023 | 160.00 | 107.00 |
11/01/2023 | 153.00 | 107.50 |
12/01/2023 | 157.00 | 98.50 |
13/01/2023 | 162.00 | 164.00 |
16/01/2023 | 160.00 | 165.00 |
7 day averages
Electric (£ per MWh) 128.21
Gas (pence per therm) 160.50
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