Monday, 04 January 2016

Transcription

1 Monday, 4 January 216 Gas Week on Week Settlement Source: TGP/ICE Contracts (p/th) 31/12/215 18/12/215 Change Gas Week on Week Settlement Source: TGP/ICE Day Ahead % p/th 31/12/215 18/12/215 Change Weekend % Feb % Mar % Q % Sum % Win % Sum % % 3.% 2.% 1.%.% -1.% -2.% -3.% -4.% -5.% Win % Power Base Week on Week Settlement Source: TGP & ICE 31/12/215 18/12/215 Change 1.% 8.% 6.% 4.% 2.%.% -2.% -4.% Power Base Week on Week Sources: TGP/ICE Contracts() 31/12/215 18/12/215 Change Day Ahead % Feb % Mar % Q % Sum % Win % Sum % Win % Power Peak Week on Week Sources: TGP/ICE Contracts() 31/12/215 18/12/215 Change Day Ahead % Feb % Mar % Q % Sum % Win % Sum % Win % Power Peak Week on Week Settlement Source: TGP & ICE 31/12/215 18/12/215 Change 8.% 6.% 4.% 2.%.% -2.% -4.%

2 UK Gas Summary Week on Week Gas Supply and Demand (mcm/day) 31/12/215 18/12/215 Demand Langeled (Norway) BBL (Netherlands) IUK (Belgium) South Hook LNG Week on Week Storage Levels 31/12/215 18/12/215 Rough 91% 91% MRS 92% 82% SRS 8% 8% South Hook 73% 33% Flow history for select supplies Source: National Grid UKCS mcm/d LNG Total Langeled BBL Net Inj/With Net IUK Import % 8% 6% % 2% % Percentage Fullness of Storage facilities Source: National Grid Rough MRS LNG p/th Negative = Injection / Positive = Withdrawal Temperature vs DA & Weekend Source: National Grid & TGP DA & Weekend Seasonal Normal Actual mcm/d UK Demand of the Past Month Source: National Grid LDZ Non LDZ Ireland Net IUK Export Net Injection Gas Summary: NBP prompt contracts eventually closed in positive territory by the end of the festive period, after trading the majority sessions in negative territory. The initial downward trend continued from the previous week, as low consumption levels due to above seasonal temperatures and a ramp down from the industrial sector persisted to weigh on prices towards Christmas. However towards the New Year, prices were pulled out their bearish trend by colder weather forecasts; with the latest day run suggesting that temperatures in Jan-16 will out-turn around seasonal normal, a steep downward revision to the very mild scenario that was previously forecast. Despite the onset of colder weather conditions, the system remained well supplied on the back of strong Norwegian and Dutch imports into the UK, while LNG send-out stayed consistent with previous levels seen throughout December. Two additional vessels were confirmed to arrive in the UK, the Arctic Discoverer and the Al Gattara are due to dock at the Isle of Grain and the South on the 1 st and 2 nd January 216 respectively. On the curve, products remained on their bearish trend as liquidity thinned ahead of the Christmas break. This was further amplified across the curve by weakness on the crude oil market, as the benchmark Brent contract fell towards 11 year lows again after a warning that global economic growth could be limited in 216. In spite of this, losses were curbed towards the end of the week, by a stronger euro against the pound, following speculation that the UK s low level of inflation will cause the Bank of England to hold monetary policy for at least the first-half of 216.

3 UK Power Summary Week on Week Power Supply and Demand (GW) 31/12/215 18/12/215 Max Forecast Demand,8 44,9 Max Generation Forecast 42,794 46,598 System Marginal Price Max () System Marginal Price Min () Max UK-France IFA Flow 2, 2, TGP DA vs N2EX DA Sources: TGP/N2EX TGP DA Base N2EX DA Average TGP Day Avg N2EX Day Avg TGP Peak/Base Ratio Ratio GW Generation Data (MW) Production Breakdown Source: TGP 31/12/215 18/12/215 Capacity Offline Offline Coal 24,559 12,81 13,292 CCGT 35,276 19,421 17,1 Nuclear 1,141 1,114 2,659 Oil and OCGT 2,1 2,1 2,1 Plants Offline (%) 41.35%.69% Nuclear Coal CCGT OCGT Hydro Pumped Storage Wind Other Oil Day UK Seasonal Baseload History Source: ICE Sum-16 Win-16 Sum-17 Win-17 GW Peak Demand & Generating Margin 2-14 days Source: Elexon Surplus (SPLD) Demand (NDFD) D-1 NDFD D-1 SPLD Power Summary: Expectations that industrial demand would fall during the Christmas period as businesses ramped down activity undermined the Day-Ahead contract in Week-52. The return to the grid of the 585MW Hartlepool -2 nuclear reactor added to the bearish pressure on 22/12/215, with temperatures above seasonal normal levels forecast until 28/12/215 also suppressing the product. Prices rebounded last week as temperatures were set to be cooler during the week, lower wind production was expected on New Year s Eve, and in anticipation of increased industrial consumption after the festive period. Near curve products weakened in the run up to Christmas as they tracked their corresponding gas contracts down into negative territory. Losses were further compounded by a stronger GB pound to euro exchange rate, which reduced buying interest from Continental buyers. Prices at the front of the NBP rebounded as Week 1 began, which supported equivalent power contracts. This was short-lived however, as gas contracts exerted bearish influence on the power near curve until the end of 215. Meanwhile, the momentum on further dated contracts was further amplified by weakness on the crude oil market, as the benchmark Brent contract fell towards 11 year lows again, following a warning that global economic growth could be limited in 216. However, this was largely offset gains on the benchmark coal contract, despite an International Energy Agency warning that the fuels golden era is over as China s economy slows and the state looks to reduce the presence of the commodity in its energy mix.

4 Wider Fuels Summary Wider Fuels Markets Source: TGP/ICE Forward Month 31/12/215 18/12/215 Change Brent Crude ($/bbl) % Coal ($/tonne) % Gas Oil ($/bbl) % GBP/EUR % USD/EUR % /1/19...% Carbon ( /tco2) EU ETS % p/th Brent Crude vs NBP Front Month and Season NBP Fwd Month p/th NBP Fwd Season p/th Brent Fwd Month $/bbl $/bbl % 3% 2% 1% % -1% $/tonne Wider Fuels & Currency Week on Week Movement Change Brent Crude ($/bbl) Coal ($/tonne) Gas Oil ($/bbl) GBP/EUR USD/EUR Coal & Carbon Price History Sources: Reuters Coal $/tonne Emissions /tonne Carbon ( /tco2) /tonne EUR/USD Currency Movement Over Previous Month EUR/USD EUR/GBP EUR/GBP France & Germany Year Ahead Power vs Front Year Carbon France Y+1 Germany Y+1 EU ETS 216 /MWh /tonne Wider Fuels Summary: Coal Coal followed Brent Crude first down into negative territory, and then onto positive ground during Week 52. The commodity firmed noticeably on the 22/12/215 under Brents positive influence, despite the International Energy Agency announcing coal s golden age had finished due to China s slowing economy and the People s Republic s focus on renewable generation. Coal continued to take bullish influence from Brent last Tuesday, however, after this prices failed to move considerably as liquidity was thin during the festive period. Carbon Strength from the benchmark Brent Crude contract lifted carbon at the start of Week /12/215 and 24/12/215 then saw EUA s soften as low liquidity limited traded volumes. Weaker German power prices in Week 1 undermined carbon, although poor liquidity may have exaggerated the downward shift.

5 Temperatures ( o C) Macroeconomic Summary Weekly Market Events: Bullish sentiment from financial sector stocks supported equities in Europe as last week began, with strength from Brent Crude adding further support on Tuesday. Commodities experienced a generally bearish end to the year, which meant stock markets began to soften. New Year s Eve saw European stocks end 215 in positive year-on-year territory. Over the weekend tensions in the Middle East between Saudi Arabia and Iran ramped up, after the Saudi Kingdom executed a prominent Shia cleric. European LNG Arrivals LNG Tanker Arrivals Regas mcm Exp. Arrival From Port Al Gattara Jan Qatar South Hook Al Kharaitiyat Jan Qatar South Hook Al Marrouna Jan Qatar Zeebrugge UK Temperature Outlook 8. Weighted Temperatures Average Temperature D-1 Average Temperature SNT Mon 4/1/16 Tue 5/1/16 Wed 6/1/16 Thu 7/1/16 Fri 8/1/16 Sat 9/1/16 Sun 1/1/16 Mon 11/1/16 Tue 12/1/16 Wed 13/1/16 Temperature graph provided by MeteoGroup

6 UK Gas Summary APX API ARA Backwardation Base Load BBL Pipeline Beach gas Bid BOM (Balance of Month) Brent Crude Cashout CCGT Clean Spread Contango Counterpart Crack Spread Curve DA (Day-Ahead Market) Dark Spread EFA Month EU ETS Firm Capacity GigaWatt (GW) Hedge ICE IFA (UK-France Interconnector) Kilowatt (kw) Kilowatt hour (kwh) Langeled Pipeline LEBA Liquefied Natural Gas (LNG) Liquidity Amsterdam Power Exchange. Run spot market platforms across Europe (formerly UKPX in the UK) American Petrolium Institute Amsterdam-Rotterdam-Antwerp. Coal Price Hub Description of a market when spot prices are higher than prices for futures Constant power load for 24 hours per day UK-Netherlands gas pipeline (from Balgzand, Netherlands, to Bacton, UK) The point at which gas is brought ashore to terminals before entering the NTS The price at which a party is willing to buy at The traded market for delivery for the remaining days in the month excluding the following day Traded on the ICE and based upon North Sea Oil The price charged for being imbalanced at the end of a period Combined Cycle Gas Turbine. The most common type of turbine used for generating electricity from burning gas The generating margin for Gas and Coal Fired electricity plant after the cost of EU ETS carbon allowances has been removed The natural market situation whereby the anticipated value of the spot market in the future is higher than the current spot market Party to a transaction A type of commodity-product spread involving the purchase of crude oil futures and the sale of gasoline and heating oil futures Refers to the futures market. Includes everything beyond the current month going forwards The traded market for delivery for the following day Represents the theoretical margin for a coal fired power plant. If a dark spread is positive, then the price of the power is higher than that of the fuel and the spread is profitable The EFA (Electricity Forwards Agreement) Calendar EU Emissions Trading Scheme, one of the policies being introduced across Europe to reduce emissions of carbon dioxide Capacity purchased in advance guaranteeing the ability of shippers and producers to flow gas into UK terminals A unit of power equal to 1,MW/1,,kW A trade to reduce the risk of adverse price movements in an asset (Intercontinental Exchange) London based exchange trading oil,gas oil and natural gas futures 2MW subsea power line connecting the UK and French grids A unit of power equal to 1, Watts The amount of energy used by a 1kW load if this is consumed for an hour Pipeline bringing Norwegian gas into the UK at Easington London Energy Broker Association Natural Gas supercooled to form a liquid for ease of storage and transportation The ability of market participants to easily enter into or unwind a transaction helping parties to buy or sell relatively close to the previous sale Long Refers the NTS or a counterparty holding more of a commodity than necessary for their current/future demand MCM million cubic metres (1 mcm of gas = 358,694 therms) MegaWatt (MW) A unit of power equal to 1,, Watts MMJ Million mega joules (1MMJ = 9,478 therms) MWh The amount of energy used by a 1MW load if this is consumed for an hour National Grid High Voltage electricity Transmission System for the UK NBP (National Balancing Point) A notional point in the UK NTS used as a delivery point for gas rather than at the beach. For accounting and balancing purposes all gas is said to flow through this point NGT (National Grid Transco) Operator and owner of the UK Electricity Grid UK and Gas National Transmission System. NTS (National Transmission System) The UK high-pressure pipeline system, owned by NGT, used to transport gas between terminals, storage facilities, large consumers and regional sites OFGEM Office of Gas and Electricity Markets - The Energy Regulator Peak Load Electricity load between 7: & 19: Monday to Friday Power Exchange Trading arena in which electricity can be bought/sold close to real time Prompt Market Essentially the same as the Spot or Short Term Market Settlement Period For the UK network each Half-hour during the day to which the system is balanced Shipper Any company with the ability to transport gas around a pipeline network Short Refers to the NTS or a counterparty holding less of a commodity than necessary to meet their current/future demand. Spark Spread Represents the theoretical margin for a gas fired power plant. If a spark spread is positive, then the price of the power is higher than that of the fuel and the spread is profitable Speculation To hold a market position with no offsetting hedge to take advantage of anticipated market movements Spot Market The market where energy commodities are traded in cash/physically and delivered immediately, not as futures Spread The difference between the bid and offer price System Buy Price The weighted average of the Offer prices of those accepted Offers in the settlement period System Sell Price The weighted average of the Bid prices of those accepted Bids in the settlement period Take or Pay The obligation of a customer to pay for a specified amount of gas whether this is taken or not TTF Title Transfer Facility (The Dutch equivalent of the NBP) Value at Risk (VAR) The measure of how the market value of a portfolio will decrease over a given period of time with a given probability WD (Within-Day Market) The traded market for delivery on the current day (not available on the electricity market) WDNW (Working Days Next Week) The traded market for delivery on the working days of the following week Weekend Market WTI Crude Oil Zeebrugge Hub The traded market for delivery for the following weekend (West Texas Intermediate) Traded on the NYMEX and the most commonly used oil benchmark. The Belgian equivalent of the UK NBP Disclaimer: The above information is supplied without any assumption of liability and you accept, by accepting the information, that we are not liable to you for your use of the information. While reasonable endeavours are taken to ensure that the information in this report is obtained from reliable sources, it is not guaranteed for accuracy. The views set forth are solely of those of the authors and not intended to provide advice or recommendations as the customer is solely responsible for its market decisions. Views expressed are subject to change without notice. Be aware that views stated are incidental to the business of Total Gas and Power Ltd. and its affiliates which are engaged in swaps, forwards, options and cash transactions for their own accounts. TGP assessments of Day Ahead, Weekend and WDNW contracts are conducted at 16 for Gas and 8 for Power, or 12 where appropriate on certain bank holidays, based on available confirmed trade data & firm bid to offer spread data, and are published for information only. TGP assessments of DA, Weekend & WDNW contracts are not to be reproduced in any format.

7 CIPS Disclaimer The above information is supplied without any assumption of liability and you accept, by accepting the information, that we are not liable to you for your use of the information. While reasonable endeavours are taken to ensure that the information in this report is obtained from reliable sources, it is not guaranteed for accuracy. The views set forth are solely of those of the authors and not intended to provide advice or recommendations as the customer is solely responsible for its market decisions. Views expressed are subject to change without notice. Be aware that views stated are incidental to the business of Total Gas & Power Ltd. and its affiliates which are engaged in swaps, forwards, options and cash transactions for their own accounts. The information contained in this document has been supplied to you by Total Gas & Power who are CIPS s Buying Energy Knowledge Partner. CIPS takes no responsibility for any loss or damage in any way arising from your interpretation or use of this information. To find out more about Total Gas & Power, visit or call +44 () To find out more about Chartered Institute of Procurement & Supply visit or call +44 () or info@cips.org Easton House, Church Street, Easton on the Hill, Stamford, Lincolnshire, PE9 3NZ