Market Insight

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Fri, 9th Feb ’24


  • Near-term monthly delivery prices are now at levels commensurate with monthly Day-Ahead averages printed Summer-2018 (see chart).
  • At the time of writing, prices all the way down the curve are lower versus yesterday’s close off the back of wet and windy weather conditions.
  • For the first time this week, the UK system was long at open (supply outstripping demand).
  • Flip-flopping forecasts persist – we’re now told (by some) to expect temperatures to remain mild next week but there’s no meaningful consensus amongst forecasters.
  • However, all seem to agree that today will by circa 5°C higher than yesterday.
  • In short, today’s bearish bias is due to temperatures being above seasonal norms, solid wind outputs, high gas storage, Norwegian outages having ended (and flows being way above the 5-day average), UKCS flows having increased to their highest level for the week.
  • Rumours are now circulating that the long touted February cold spell might not materialise!
  • Whilst geopolitical risk is stopping the markets from falling off a cliff as summer approaches, the impact of Ukraine and the Red Sea problems on the supply/demand dynamic seem to be limited.
  • Monthly Day-Ahead averages are on target this month (so far) to achieve 70p/therm (or circa. 2.4p/kwh).


  • Near-term monthly delivery prices are now at levels commensurate with monthly Day-Ahead averages printed Summer-2018 (see chart).
  • Looking to the continent, European near-term delivery prices have faded (as expected) for the last working day of the week – pressured in the main by prospects of rebounding wind generation and lower demand.
  • Next week, prices may find some support from weaker wind outputs and French nuclear availability – although a noticeable increase of solar generation should offset any meaningul bullish momentum.
  • Forward markets remain heavily influenced by weather with successive warmer revisions to mid-February temperature forecasts exerting downward pressure on prices yesterday and continuing to do so this morning.
  • Fundamental drivers remain very comfortable and a significant rebound/upside testing seems unlikely at this time.
  • Carbon prices remain in near oversold territory across the technical momentum indicators (RSI/MACD/Stochastics).
  • Speculators have stopped adding to their short positions since mid-January, suggesting bearish trend exhaustion and imminent profit taking.
  • Nonetheless, carbon remains within the coal to gas switching range, suggesting that as long as gas prices continue to fall, emissions prices could very easily follow.
  • Back in the UK, our generation mix is bearish with renewables contributing 44% versus 23% gas-for-power burn.
  • Monthly Day-Ahead averages for UK electricity are on target this month (so far) to achieve £57/mwh (or 5.7p/kwh).



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