UK short-term gas spikes on Siberian cold blast fears, then eases; forecasts revised
Tuesday 27th February 2018
End-of-day UK short-term gas prices spiked to their highest level in more than four years on Friday, with Day-ahead closing at 71 p/th, having traded up to 75 p/th, as the imminent arrival of the “Beast from the East” cold weather front propelled levels higher.* However prices were easing again Monday morning in the face of robust supplies and as weather forecasts were revised.
Day-ahead UK power prices also surged to mid-December levels on Friday, around £64/MWh. While Month-ahead levels received a boost in turn, it was very small by comparison – March UK gas pushing above 56 p/th and UK power above £53/MWh, as annual prices barely reacted, registering a negligible uptick.
At the time of writing Day-ahead gas was trading down at 67 p/th, and Day-ahead UK power just beneath £60/MWh ─ although they still remain elevated compared to levels over the last two-and-a-half months, helped by the arrival of snow in London, where many traders are based.
But Month-ahead markets were coming under greater pressure ─ UK gas shedding over 4 p/th in value ─ as weather forecasters revised their outlook from Thursday onwards – predicting a warmer and windier spell across much of Europe. This helped nudge annuals fractionally lower again too.
*Although Day-ahead closed Friday above the end-of-day prices seen during the last spike – in mid-December, following an explosion at a key Central European gas hub and the shutdown of the Forties Pipeline System in the North Sea for emergency crack repair work – at that time Day-ahead traded at even higher levels during the day – over 85 p/th.