Sources: TGP/ICE
Contracts(£/MWh)
31/12/2015
18/12/2015
Change
Day Ahead
36.75
33.50
8.8%
Feb-16
36.60
36.90
-0.8%
Mar-16
34.83
35.89
-3.0%
Q2-16
34.70
35.35
-1.9%
Sum-16
34.50
35.13
-1.8%
Win-16
38.58
39.12
-1.4%
Sum-17
34.25
34.45
-0.6%
Win-17
38.30
38.20
0.3%
Power Base Week on Week
Power Peak Week on Week
Sources: TGP/ICE
Contracts(£/MWh)
31/12/2015
18/12/2015
Change
Day Ahead
41.40
38.50
7.0%
Feb-16
42.71
42.94
-0.5%
Mar-16
39.38
40.39
-2.6%
Q2-16
38.80
39.36
-1.4%
Sum-16
38.37
38.88
-1.3%
Win-16
46.11
46.93
-1.8%
Sum-17
38.00
38.35
-0.9%
Win-17
47.45
46.80
1.4%
Source: TGP/ICE
Contracts (p/th)
31/12/2015
18/12/2015
Change
Day Ahead
32.55
31.55
3.2%
Weekend
32.28
31.55
2.3%
Feb-15
33.13
34.50
-4.0%
Mar-15
32.69
33.90
-3.6%
Q2-16
31.10
31.98
-2.8%
Sum-16
30.83
31.68
-2.7%
Win-16
35.28
36.07
-2.2%
Sum-17
31.88
32.32
-1.4%
Win-17
36.15
36.34
-0.5%
Gas Week on Week Settlement
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
0
10
20
30
40
50
p/th
Gas Week on Week Settlement
Source: TGP/ICE
31/12/2015
18/12/2015
Change
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
0
10
20
30
40
50
60
£/MWh
Power Base Week on Week Settlement
Source: TGP & ICE
31/12/2015
18/12/2015
Change
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
0
10
20
30
40
50
60
£/MWh
Power Peak Week on Week Settlement
Source: TGP & ICE
31/12/2015
18/12/2015
Change
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 30 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
stand 2
ndJanuary 2016 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 2016. 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 2016.
Week on Week Gas Supply and Demand (mcm/day)
Source: Reuters
31/12/2015
18/12/2015
Demand
251.1
239.8
Langeled (Norway)
57.8
46.7
BBL (Netherlands)
19
17
IUK (Belgium)
-11.5
-29.5
South Hook LNG
35.0
26.5
Week on Week Storage Levels
Source: Reut ers
31/12/2015
18/12/2015
Rough
91%
91%
MRS
92%
82%
SRS
8%
8%
South Hook
73%
33%
0%
20%
40%
60%
80%
100%
Percentage Fullness of Storage facilities
Source: National Grid
Rough
MRS
LNG
-100
-50
0
50
100
150
200
250
300
350
mcm/d
Flow history for select supplies
Source: National Grid
UKCS
LNG Total
Langeled
BBL
Net Inj/With
Net IUK Import
Negative = Injection / Positive = Withdrawal
0
50
100
150
200
250
300
mcm/d
UK Demand of the Past Month
Source: National Grid
LDZ
Non LDZ
Ireland
Net IUK Export
Net Injection
0
4
8
12
16
28
33
38
43
℃
p/th
Temperature vs DA & Weekend
Source: National Grid & TGP
DA & Weekend
Seasonal Normal
Actual
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 22/12/2015, with temperatures above seasonal normal levels forecast until
28/12/2015 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 2015.
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 2016. 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.
0.00
0.50
1.00
1.50
26
30
34
38
42
Ratio
£/MWh
TGP DA vs N2EX DA
Sources: TGP/N2EX
TGP DA Base
N2EX DA Average
TGP 30 Day Avg
N2EX 30 Day Avg
TGP Peak/Base Ratio
32
36
40
44
£/MWh
130 Day UK Seasonal Baseload History
Source: ICE
Sum-16
Win-16
Sum-17
Win-17
UK Power Summary
UK Power Summary
0
5
10
15
20
25
30
35
GW
Production Breakdown
Source: Reuters
Nuclear
Coal
CCGT
OCGT
Hydro
Pumped Storage
Wind
Other
Oil
20
25
30
35
40
45
50
55
60
Peak Demand & Generating Margin 2-14 days
Source: Elexon
Surplus (SPLD)
Demand (NDFD)
D-1 NDFD
D-1 SPLD
GW
Week on Week Power Supply and Demand (GW)
Source: Reuters
31/12/2015
18/12/2015
Max Forecast Demand
40,800
44,900
Max Generation Forecast
42,794
46,598
System Marginal Price Max (£/MWh)
46.00
48.00
System Marginal Price Min (£/MWh)
29.25
0.00
Max UK-France IFA Flow
2,000
2,000
Generation Data (MW)
Source: TGP
31/12/2015
18/12/2015
Capacity
Offline
Offline
Coal
24,559
12,801
13,292
CCGT
35,276
19,421
17,001
Nuclear
10,141
1,114
2,659
Oil and OCGT
2,130
2,130
2,130
0.64
0.68
0.72
0.76
1.04
1.06
1.08
1.10
1.12
1.14
1.16
EUR/GBP
EUR/USD
Currency Movement Over Previous Month
Source: Reuters
EUR/USD
EUR/GBP
35
40
45
50
25
30
35
40
$/bbl
p/th
Brent Crude vs NBP Front Month and Season
Source: Reuters
NBP Fwd Month p/th
NBP Fwd Season p/th
Brent Fwd Month $/bbl
Wider Fuels Summary:
Coal
Coal followed Brent Crude first down into negative territory, and then onto positive ground during Week 52. The commodity firmed noticeably on the
22/12/2015 under Brents positive influence, despite the International Energy Agency announcing coal’s golden age had finished due to China’s slowing
economy and the People’s Republic’s focus on renewable generation. Coal continued to take bullish influence from Brent last Tuesday, however, after
this prices failed to move considerably as liquidity was thin during the festive period.
Carbon
Strength from the benchmark Brent Crude contract lifted carbon at the start of Week 52. 23/12/2015 and 24/12/2015 then saw EUA’s soften as low
liquidity limited traded volumes. Weaker German power prices in Week 1 undermined carbon, although poor liquidity may have exaggerated the
downward shift.
7
7.4
7.8
8.2
8.6
9
26.00
30.00
34.00
38.00
42.00
€/tonne
€/MWh
France & Germany Year Ahead Power vs Front Year
Carbon
Source: Reuters
France Y+1
Germany Y+1
EU ETS 2016
Source: TGP/ICE
Forward Month
31/12/2015
18/12/2015
Change
Brent Crude ($/bbl)
37.28
36.88
1.1%
Coal ($/tonne)
44.20
44.00
0.5%
Gas Oil ($/bbl)
336.50
334.25
0.7%
GBP/EUR
1.3604
1.3654
-0.4%
USD/EUR
0.9210
0.9113
1.0%
00/01/1900
0.00
0.00
0.0%
Carbon (€/tCO2)
EU ETS 2016
8.27
8.07
2.4%
Wider Fuels Markets
7
7.5
8
8.5
9
42
44
46
48
50
52
€/tonne
$/tonne
Coal & Carbon Price History
Sources: Reuters
Coal $/tonne
Emissions €/tonne
-1%
0%
1%
2%
3%
Brent
Crude
($/bbl)
Coal
($/tonne)
Gas Oil
($/bbl)
GBP/EUR USD/EUR Carbon
(€/tCO2)
%
Wider Fuels & Currency Week on Week Movement
Source: Reuters
Change
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 2015 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.
Temperature graph provided by MeteoGroup
LNG Tanker Arrivals
Regas mcm
Exp. Arrival
From
Port
Al Gattara
132
04-Jan
Qatar
South Hook
Al Kharaitiyat
129
08-Jan
Qatar
South Hook
Al Marrouna
91
15-Jan
Qatar
Zeebrugge
Macroeconomic Summary
European LNG Arrivals
UK Temperature Outlook
4.00
4.50
5.00
5.50
6.00
6.50
7.00
7.50
8.00
Mon
04/01/16
05/01/16
Tue
06/01/16
Wed
07/01/16
Thu
08/01/16
Fri
09/01/16
Sat
10/01/16
Sun
11/01/16
Mon
12/01/16
Tue
13/01/16
Wed
Tem
per
at
ur
es
(
o
C)
Weighted Temperatures
APX Am s terdam Power Exchange. Run s pot m arket platform s acros s Europe (form erly UKPX in the UK) API Am erican Petrolium Ins titute
ARA Am s terdam -Rotterdam -Antwerp. Coal Price Hub
Backwardation Des cription of a m arket when s pot prices are higher than prices for futures
Base Load Cons tant power load for 24 hours per day
BBL Pipeline UK-Netherlands gas pipeline (from Balgzand, Netherlands , to Bacton, UK)
Beach gas The point at which gas is brought as hore to term inals before entering the NTS
Bid The price at which a party is willing to buy at
BOM (Balance of Month) The traded m arket for delivery for the rem aining days in the m onth excluding the following day
Brent Crude Traded on the ICE and bas ed upon North Sea Oil
Cashout The price charged for being im balanced at the end of a period
CCGT Com bined Cycle Gas Turbine. The m os t com m on type of turbine us ed for generating electricity from burning gas
Clean Spread The generating m argin for Gas and Coal Fired electricity plant after the cos t of EU ETS carbon allowances has been rem oved
Contango The natural m arket s ituation whereby the anticipated value of the s pot m arket in the future is higher than the current s pot m arket
Counterpart Party to a trans action
Crack Spread A type of com m odity-product s pread involving the purchas e of crude oil futures and the s ale of gas oline and heating oil futures
Curve Refers to the futures m arket. Includes everything beyond the current m onth going forwards
DA (Day-Ahead Market) The traded m arket for delivery for the following day
Dark Spread Repres ents the theoretical m argin for a coal fired power plant. If a dark s pread is pos itive, then the price of the power is higher than that of the
fuel and the s pread is profitable
EFA Month The EFA (Electricity Forwards Agreem ent) Calendar
EU ETS EU Em is s ions Trading Schem e, one of the policies being introduced acros s Europe to reduce em is s ions of carbon dioxide
Firm Capacity Capacity purchas ed in advance guaranteeing the ability of s hippers and producers to flow gas into UK term inals
GigaWatt (GW) A unit of power equal to 1,000MW/1,000,000kW
Hedge A trade to reduce the ris k of advers e price m ovem ents in an as s et
ICE (Intercontinental Exchange) London bas ed exchange trading oil,gas oil and natural gas futures
IFA (UK-France Interconnector) 2000MW s ubs ea power line connecting the UK and French grids
Kilowatt (kW) A unit of power equal to 1,000 Watts
Kilowatt hour (kWh) The am ount of energy us ed by a 1kW load if this is cons um ed for an hour
Langeled Pipeline Pipeline bringing Norwegian gas into the UK at Eas ington
LEBA London Energy Broker As s ociation
Liquefied Natural Gas (LNG) Natural Gas s upercooled to form a liquid for eas e of s torage and trans portation
Liquidity The ability of m arket participants to eas ily enter into or unwind a trans action helping parties to buy or s ell relatively clos e to the previous s ale
Long Refers the NTS or a counterparty holding m ore of a com m odity than neces s ary for their current/future dem and
MCM m illion cubic m etres (1 m cm of gas = 358,694 therm s )
MegaWatt (MW) A unit of power equal to 1,000,000 Watts
MMJ Million m ega joules (1MMJ = 9,478 therm s )
MWh The am ount of energy us ed by a 1MW load if this is cons um ed for an hour
National Grid High Voltage electricity Trans m is s ion Sys tem for the UK
NBP (National Balancing Point) A notional point in the UK NTS us ed as a delivery point for gas rather than at the beach. For accounting and balancing purpos es all gas is s aid
to flow through this point
NGT (National Grid Transco) Operator and owner of the UK Electricity Grid UK and Gas National Trans m is s ion Sys tem .
NTS (National Transmission System)
The UK high-pres s ure pipeline s ys tem , owned by NGT, us ed to trans port gas between term inals , s torage facilities , large cons um ers and regional s ites
OFGEM Office of Gas and Electricity Markets - The Energy Regulator
Peak Load Electricity load between 07:00 & 19:00 Monday to Friday
Power Exchange Trading arena in which electricity can be bought/s old clos e to real tim e
Prompt Market Es s entially the s am e as the Spot or Short Term Market
Settlement Period For the UK network each Half-hour during the day to which the s ys tem is balanced
Shipper Any com pany with the ability to trans port gas around a pipeline network
Short Refers to the NTS or a counterparty holding les s of a com m odity than neces s ary to m eet their current/future dem and.
Spark Spread Repres ents the theoretical m argin for a gas fired power plant. If a s park s pread is pos itive, then the price of the power is higher than that of the
fuel and the s pread is profitable
Speculation To hold a m arket pos ition with no offs etting hedge to take advantage of anticipated m arket m ovem ents
Spot Market The m arket where energy com m odities are traded in cas h/phys ically and delivered im m ediately, not as futures
Spread The difference between the bid and offer price
System Buy Price The weighted average of the Offer prices of thos e accepted Offers in the s ettlem ent period
System Sell Price The weighted average of the Bid prices of thos e accepted Bids in the s ettlem ent period
Take or Pay The obligation of a cus tom er to pay for a s pecified am ount of gas whether this is taken or not
TTF Title Trans fer Facility (The Dutch equivalent of the NBP)
Value at Risk (VAR) The m eas ure of how the m arket value of a portfolio will decreas e over a given period of tim e with a given probability
WD (Within-Day Market) The traded m arket for delivery on the current day (not available on the electricity m arket)
WDNW (Working Days Next Week) The traded m arket for delivery on the working days of the following week
Weekend Market The traded m arket for delivery for the following weekend
WTI Crude Oil (Wes t Texas Interm ediate) Traded on the NYMEX and the m os t com m only us ed oil benchm ark.
Zeebrugge Hub 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 1630 for Gas and 0830 for Power, or 1200 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.
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 www.totalgp.com/cips or call +44 (0)800 542 3275.
To find out more about Chartered Institute of Procurement & Supply visit http://www.cips.org/
or call +44 (0)1780 756777 or email [email protected]
