UK review: Eurozone plight weighs down electricity curve but stability returns
Seasonal contracts along the length of the UK wholesale electricity forward curve recorded scant movement in week 19 after a soft opening session on Tuesday.
The first day following the UK's three-day weekend saw the front winter slide to a 14-week low in the wake of the political shift seen across the eurozone following elections in France and Greece, and the rest of the curve followed.
The bearish reaction to the weekend's elections had worked its way through the wider energy complex well before the close of Tuesday's session, however, to give way to a relatively stagnant two days of trade as contracts nudged cautiously higher, only to retrace those marginal gains.
A disconnect between the NBP and power front-winter contracts was seen mid-week, with the gas product's gains outpacing those of power, resulting in a heavy 24% loss on the clean spark spread in a single session.
"We saw strong bidding on the front winter [gas contract], but power didn't have the appetite," one trader commented.
The story was similar on the near curve, with the opening session's weakness giving way to an air of caution.
With National Grid's long term consumption expectations looking historically weak, as a result of the UK being officially back in recession, and the wider eurozone outlook remaining poor, traders were convinced that the demand side of the equation would lack bullish drivers: "If anything's going to offer fundamental support, it's going to be on the supply side," one said.
The prompt proved strong throughout the week, again in the wake of a bearish opening session, as unseasonably cold weather continued to hold the country in its grip.
Day-ahead Baseload for Friday delivery was last assessed £1.60/MWh higher than the equivalent contract at the close of Tuesday's session.
The first sub-10GW peak supply margin forecasts seen this year provided support, as did a major switch-off of coal-fired power plants for maintenance purposes towards the end of the week. JS
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