UK Energy Pricing Trends - 7 May 2021

UK Power Pricing Trends | 7 May 2021

The U.K. spot market received some mild relief last week with a move to more seasonal temperatures and a near doubling of wind-generated power. On the curve, however, a shift to more favourable weather conditions failed to offset tight gas supplies and rising carbon prices. Subsequently, forward prices noted a 6th consecutive week of gains. A 14-week extension to the maintenance at the U.K’s Sizewell B nuclear plant, tripling the time of the outage, lent additional support to short-dated contracts. Moreover, sentiment remained transfixed on the bullish reopening narrative, despite future growth prospects being revised down in the BoE’s May forecast.

UK Natural Gas Pricing Trends | 7 May 2021

Further declines in Britain’s aggregate storage continued as the headline driver for higher U.K. gas prices. While total U.K. gas demand remained largely flat last week, bullish supply-side factors prompted NBP gas prices higher. LNG deliveries to NW Europe dropped by more than a quarter week-on-week while Russia, for a second week, decided not to take up spare capacity in Ukraine pipeline into Europe. Moreover, the outlook for LNG arrivals continued to favour Asia as, although diminishing, the positive spread between European and Asian LNG prices remained intact.

UK Energy Complex | 7 May 2021

The release of more promising economic data added fuel to the bullish energy market narrative last week. May’s upward movement in consumer confidence, although still below pre-pandemic levels, supported the notion that consumers will continue to spend accumulated savings. Furthermore, a more resilient economic performance over Q1-21 resulted in the BoE’s upward revision 2021 growth from 5% to 7.25%. However, the central bank became more pessimistic about future growth prospects, with forecasts for Q2 and Q3-Q4 revised down by 0.9% and 0.65%, respectively. Despite the 2020 compliance deadline passing, European carbon prices continued their upward trajectory as the European Commission ruled out intervention to prevent excessive speculative behaviour and the European Commission’s climate chief signals support for higher carbon prices.

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