Energy market update - February
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Energy market update - February

By Adam Throup, Category Manager - Energy

Last month’s direction was mainly driven by the anticipation of the “Beast from the East”, which we now know did bring the country to a standstill.  This was the first major test for the industry since the loss of Rough storage.

Initially pushed higher due to the gas production cuts at the Groningen Field.  The later part of the month dominated by the risk of extremely cold temperatures, which gave increased prices strength.  Renewable generation remained fairly stable, which is not always the case during snowy periods.  Coal has seen a resurgence during this period, generating up to 11GW.


Plummeting temperatures and surges in demand have driven the pricing.  The cold weather spell was revised to a shorter period and this created downward pressure on the pricing.  Europe experienced the same cold snap as the UK and this created strength in the price.  In the main, the gas system dealt with the Beast fairly well with healthy flows from Europe supporting our requirements.

LNG cargoes are still low as high demand in Asia takes the shipments.  Only one tanker arrived in the UK during the month.

Groningen production levels were capped off at half of the current levels which created an upside to prices, but this announcement was expected and had been priced in previously.

Underlying Fuels
Brent Oil has been volatile.  Drastic falls at the start of the month led by US production increases saw pricing drop to $61.48/bbl.  OPEC’s commitment to reducing the global oil supply glut, and a weaker $, provided the reasons for a rebound and from the middle of the month the pricing built up to $67/bbl.  A small slide towards the end of the month saw oil ending at $64.68/bbl.

Some experts are predicting a slow down in the Chinese demand for oil, which could see another increase in global stock and again pressure the prices downwards.

Everything is about the weather.  Cold forecasts throughout March and into April will drive the cost.  LNG deliveries remain limited, but the supply from Europe is healthy.

For further discussions about the markets and to discuss strategies, please contact Adam Throup, [email protected].