History of Energy Prices Wednesday 05 June 2019

History of Energy Prices Wednesday 05 June 2019

 

Historic Factors

 

22 May 2019 – A 3.4 magnitude earthquake hit a village close to Groningen lifting the NBP curve. Further earthquakes add bullish sentiment as they could accelerate the already planned slowdown of production at the Norwegian gas field.

 

02 May 2019 – Europe benefits from ample LNG supply as LNG send out overtakes Norwegian flows as Europe’s second largest supplier in April, weighing on prompt prices across European gas markets.

 

21 April 2019 – The Interconnector pipeline undergoes planned maintenance scheduled for a period of 10 days. The UK system loses the ability to offload surplus gas to Belgium.

 

09 April 2019 – DA climbed over 2p/th. as Aasta Hansteen went offline for up to 2 weeks.

 

05 April 2019 – Surging Carbon Dec-19 EUA’s continued to drive the NBP up off the back of Brexit optimism, with the PM seeking an extension to Article 50, reassuring traders that the UK may remain in the EU ETS until the end of 2019.

 

12 March 2019 – Milder weather, an increase in LNG arrivals and strong European storage levels are resulting in decreases on the NBP.

 

26 February 2019 – UK temperatures broke previous Winter records and weighed on the front of the NBP curve, following the trend seen throughout February.

 

21 January 2019 – The NBP prompt fell over 3p/therm at open with signs of a prolonged period of cold in February coming out of forecasts over the weekend. An oversupplied system and strong LNG send out also pulled prices down.

 

15 January 2019 – Theresa May’s Brexit deal is defeated by a majority of 230 votes in parliament. GBP strengthened as a result and kept a lid on NBP price gains off the back of colder weather forecasts.

 

21 December 2018 – Strong LNG send out and mild weather forecasts for the holiday period contributed to losses on the NBP.

 

12 December 2018 – Theresa May faces a vote of no confidence. GBP strengthened as a result but did little to stop the NBP curve from rising due to strength in oil and wider commodities in carbon EUA’s and coal.

 

07 December 2018 – OPEC agreed a production of 1.2 million barrels. The market expected a cut of around 800,000 barrels so oil prices rose off the back of the larger cut being announced.

 

14 November 2018 – Brexit Uncertainty. Theresa May announces that the cabinet have agreed in principle a Draft Brexit deal, leading to numerous resignations and debate in parliament. The uncertainty surrounding the market weakened GBP and lifted gas prices.

 

31 October 2018 – Weaker commodities in carbon and coal, along with strong supply into the UK and milder temperature forecasts have pressured both the near and the far NBP curve downwards.

 

16 October 2018 – European gas markets being at a premium to Asian markets fuelled an influx of LNG to European terminals and send out reached its highest level since 2012.

 

03 October 2018 – API2 2019 coal traded over $100/tonne off the back of increased demand as stocks replenish and supply tightness. The gains filtered into European gas hubs with the NBP lifting in line with coal.

 

01 October 2018 – The start of the new gas year marked the expiry of long term capacity contracts on the IUK. The pipeline was nominating at a rate of 0.9mcm, pushing NBP prompt prices down as the lack of export demand sent the system around 30mcm long.

 

02 September 2018 – The NBP collapsed, tracking a crash in Carbon EUA’s. Dec-18 EUA’s fell over 20% on the back of profit taking and the possibility of further credits being added to the market to boost supply.

 

29 August 2018 – Strength in GBP went against the bulls on the NBP. Barnier’s comments on Brexit drove significant gains with the Chief Negotiator stating “We are prepared to offer a partnership with Britain such as has never been with any other third country”.

 

24 August 2018 – Disruption set to continue in the North Sea after Unite and Total failed to come to an agreement over pay structure and working hours. Strikes are set for 17th September, 1st, 15th and 29th October.

 

17 August 2018 – Norwegian maintenance and continued strike action on platforms in the North Sea supported the front of the curve.

 

14 August 2018 – Carbon EUA futures hit 10 years’ highs, on the back of utility companies hedging their generation, providing support to gas markets across Europe.

 

08 August 2018 – Talk of a ‘no deal Brexit’ and continuing uncertainty resulted in GBP/EUR hitting lows of around 1.10, levels not seen since September 2017, encouraging European buyers of NBP gas.

 

07 August 2018 – The US re-imposed economic sanctions on Iran, severely hindering Iranian oil output. Brent and the NBP lifted as a result.

 

25 July 2018 – Strength in Coal continues to drive the NBP with increases in Asian and European demand off the back of low wind generation and warm temperatures.

 

16 July 2018 – Oil saw the largest intraday drop for 2 years after falling around $3.50/bbl. off the back of a potential increase in Russian production, Norwegian oil worker strikes ending and the US considering the importation of Iranian oil despite sanctions.

 

10 July 2018 – Strength in wider commodities bolstered the NBP. API2 Coal reached new multi-year highs of around $92.95/tonne.

 

28 June 2018 –  The planned Interconnector maintenance ended and strong exports to Europe through the pipeline followed.

 

22 June 2018 – OPEC agreed a modest increase in oil production of approximately 700,000 barrels per day.

 

12 June 2018 – The NBP Day Ahead contract opened around 1.65p/th below the previous days close on the back of Interconnector maintenance (13th-28th June).

 

07 June 2018 – A letter from the Dutch economic affairs minister to Dutch parliament claimed that gas production at Groningen could be reduced to below 12bcm by October 2020, 2 years ahead of schedule.

 

05 June 2018 – The sell off on the NBP continued, after weeks of gains, following warmer weather, an improvement in European storage levels and weaker oil.

 

30 May 2018 – Oil prices fell as Russia hinted at increasing production to offset the reduced exports from Venezuela & Iran, following both countries having sanctions placed on them by the US.

 

22 May 2018 – Carbon EUA’s continue to climb after trading above €16.00/tonne for the first time in several years, bolstering the NBP.

 

15 May 2018 – The NBP is driven by movements in the wider energy markets. Bullish moves in oil, carbon, coal and power are all contributing to rises in the NBP price curve.

 

08 May 2018 – Oil prices lifted after President Trump withdrew the US from the Iran nuclear deal. Brent jumped to its highest level since 2014 as the withdrawal increased the risk of conflict in the Middle East and cast uncertainty over global oil supplies.

 

25 April 2018 – Norwegian outages continue to bolster the NBP prompt with maintenance season in full swing.

 

14 April 2018 – The NBP far curve is driven higher by oil prices as they hit their highest level since 2014 as a result of US led strikes on Syria.

 

09 April 2018 – 2% rally in Brent off the back off a weaker US dollar and easing concerns surrounding a trade war between the US and China lifts the NBP curve.

 

29 March 2018 – The Dutch Government announce that production at Groningen will be reduced to 12 bcm by October 2022.

 

01 March 2018 – The Beast from the East hits the UK bringing temperatures significantly below seasonal normal. As a result, NBP prompt prices rocket off the back of increased demand with the WD contract trading at its highest ever level of 350p/th.

 

13 February 2018 – The weather continues to drive the market with colder weather resulting in significant gains on NBP prompt.

 

07 February 2018 – A feed control valve at the Kinneil gas terminal led to another shut down of the Forties Pipeline System (FPS) in the North Sea. However, the shutdown was short lived on the system was fully operational the following day.

 

01 February 2018 – The Dutch mining regulator (SSM) recommended Groningen output be cut from 21 bcm to 12 bcm to ensure the safety of the people of Groningen.

 

29 January 2018 – The NBP prompt continues its trend downwards off the back of a very healthy UK system as a result of strong supply from Europe and the UK continental shelf.

 

08 January 2018 – A large earthquake, of 3.4 magnitude on the Richter scale, hits Groningen. As a result, a further production cut at the gas field comes into question.

 

02 January 2018 – Political tensions in Iran and ongoing OPEC cuts sends Brent crude to near 3 year highs of around $68/bbl.

 

History of Energy Prices Wednesday 05 June 2019 – Outlook

 

Potential Bearish Price Drivers ↓

 

  • LNG arrivals.
  • Weakness in oil and coal.
  • Healthy UK system.

 

Potential Bullish Price Drivers ↑

 

  • Outages and maintenance – Norwegian fields and facilities.
  • Colder weather forecasts.
  • Strength in carbon EUA’s.
  • Weakness in GBP – Brexit/Conservative leadership contest.

History of Energy Prices Wednesday 05 June 2019 brought to you by British Utilities

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