Northern Gas and Power’s Post

Transcript

Hello and welcome to this week's Market Update. My name is Lee and I'm one of the analysts here in Northern Gas and Power. Spot prices in the UK are 4% higher week on week. Gas for power demand averaged 21 MCM per day last week. A six MCM per day increased compared to the previous week's average. Due to cooler temperatures as we leave summer and approach all the local gas demand in the UK is averaged 50 MCM per day. Last week 3 MCM per day increased when compared to the same period last year and a one MCM per day increased compared to the week before. TCF gas prices remain unchanged week on week. Temperatures in key areas remain benign, meaning there is a lack of cooling as well as heating demand. Asian spot markets rise over 7% as temperatures show no sign of decline. Prices have risen to 8 months highs as gas for power generation and the region struggles to keep up with the demand, completing the regions LNG stocks. Henry hopes bought prices unchanged week on week, however prices are set to push higher as forecast going in the next week show warmer temperatures, boosting the amount of gas power generators will require to keep up with cooling demands. The MBP front month contracts closed lower compared to the last week, however future markets closed mostly higher. European gas prices have been largely influenced by recent heat waves, particularly in France, with a number of nuclear reactors being forced to go offline as nearby river temperatures exceed the maximum temperature to be able to efficiently cool the reactors. Pushing prices higher due to scarcity of supply. Due to political concerns of WEIRD heavy on UK and EU markets. Recently notably conflict and said to Russia, where there is a key transit point for gas leading to EU, which has come under fire by local attacks the pipeline. It's worth 2 billion U.S. dollars a year in revenue is due to be shut down at the end of the year due to contract expiry and Ukraine opting not to renew it. However, with the ongoing conflict in the area, we may see the pipeline shut down early over safety concerns. Asian futures markets continue to be affected by warmer temperatures with increases observed across the board. Cooling demand remains the largest price driver for the region. We gone weak U.S. markets have retraced on future contracts total US gas consumption. Has fallen by 8.1% in recent weeks, while gas storage only fell 1.8%, showing a strong fundamental supply picture. Prices on the September 24 contract increased 1.6% week to week. Temperatures throughout last week increased to a high of 20.3��C, four degrees higher than seasonal normal levels. This sparked an increase in cooling demand in the region, creating an additional requirement for power, pushing prices slightly higher. There are currently no UK nuclear reactors offline, however, there are two planned outages on the horizon for the remainder of August. Hartlepool 2 on the 24th of August, 585 megawatts reduction in capacity and Hasham 11 on the 1st of September, 580 megawatts reduction in capacity. Increased nuclear generation reduces gas for power demand. Wind generation averaged 7.81 gigawatts over the past week, a decrease from the 9.5 gigawatts of generation the previous week. Wind generation during this week is forecasted to peak at over 15 gigawatts. Prices along the curve continue to push higher and a fundamentally strong market gas storage and current temperatures point of the bearish market structure. However, prices remain inflated. Currently, prices remain elevated as geopolitical tensions in Ukraine and the uncertainty of coming winters temperatures create fears in the market. UK and European spot power prices soar and across the board decrease following a strong fundamental supply. UK deer head power contract remains most largely influenced by wind generation. In periods of high wind generation, the power generator can be sold at extremely competitive prices as there was no cost to generate it. The day ahead contract continues to outturn more cheaply that the prevailing futures market. French spot prices have retraced downwards from recent highs as French nuclear generation has increased week on week following recent shutdown in nuclear reactors due to the rise in river temperatures that are used to cool the reactors. Prices in Germany reacted due to interconnectors between Germany and France linking the two power markets. Nordic prices push lower as heavy rainfall in the hydropower intensive region creates an influx of supply. Thanks for watching this week's market report. Be sure to follow us on LinkedIn. There are more information.