Weekly Market Update - Surprise production cuts announced by OPEC+ at the weekend drive up prices

Head of Sales Trading, Fanos Shiamishis, reports on energy market activity, covering the period 28^th March – 4th April 2023. On our end-of-day pricing tool, The Source, we published an in-week high of £190/MWh for the Winter-23 seasonal power price on 3rd April. In this blog, Fanos shares the market news and updates from the last week.   

Volumes on the UK power curve had picked up last Tuesday with more than 300 MW April 23 and 450 MW Winter 23 trading. On the eve of expiry, the April, Q2 and Summer-23 contracts for power and gas opened strong with a colder outlook being reported by some agencies for Winter-23 fuelling some speculative buying. 

April, Q2 and Summer gas expired on Wednesday with late trading strengthening prices and closing out April NBP at 107.48p/th.  The UK gas system opened marginally short but the forecasted outlook showed minimal causes for the increase in price.  A slight drop in temperature was offset by unchanged gas for power generation demand, and strong wind forecast. 

Thursday showed strong gains with minimal volumes clearing but bullish signals seen in other markets as well as late position management for power for April, Q2 and Summer. 

Against a backdrop of unexpected weekend oil news from OPEC+ to cut production, and cooler temperature outlook across Europe, UK and TTF prices opened stronger yesterday morning with significant rally in the seasonal baseload contracts in the last trading hour.