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E.ON Monthly
Market Report
March 2015
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Market summary for February
Gas: A mixed month saw prices outturn slightly up on last month.
Power: The power market continued to mimic the movements in gas.
Oil: The price of oil picked up.
Carbon: A month of both upwards and downwards pressure saw prices continue to edge up slightly.
Direction of commodity prices
(February 2014 to February 2015)
Year
Gas price
Power price
Oil price
Carbon price
Gas
Monthly Market Report | March 2015 | 02
A month of two halves
shaped by production
concerns and strong
LNG supply.
The British power
market mirrored
movements on the
gas market again this
month.
Power prices continued to largely track movements on the gas market. Prices were initially pushed
higher amid the news of the production cap at the Groningen gas field (Netherlands) as well as lower
wind generation forecasts and reduced nuclear power availability. Positive weather forecasts pointing
to normal temperatures, combined with an increase in expected wind output and a strong LNG outlook
did however soften power prices following the February peak.
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Power
Production problems in Norway affecting British imports created supply concerns adding upward
pressure on gas prices. This was added to by news of a cut in production at a major gas field in the
Netherlands until July, with the potential for the restriction to continue for the remainder of 2015. This,
coupled with the strong oil market saw prices peak for the month on 12 February. However an upwards
revision to temperature forecasts and comfortable LNG supply led to a fall in gas demand, which saw
prices come down following its mid-month peak.
Oil
Monthly Market Report | March 2015 | 03
Oil prices rallied
throughout February
following supply concerns
and a boost in oil
demand expectations.
Falling US rig counts and supply disruptions in Libya and Iraq sparked supply concerns pushing prices
up. This was supported by a warning regarding the current unrest and lack of investment in the Middle
East from the IEA adding to the supply risk.
Carbon prices see a
slight increase despite
continued uncertainty.
Speculation concerning the EU Carbon Market Reform once again remained the biggest
driver in the carbon market this month. EUAs increased as political developments around
market reform left market participants with optimism that intervention is more likely.
However this was short lived as news of political groups failing to reach a compromise
caused prices to fall back down, with falling fuel and power prices adding to the sentiment.
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Carbon
OPEC released their monthly oil market report which showed an increase in their forecasts for 2015
crude demand, which boosted prices. This was reinforced by positive GDP data from Germany lifting oil
demand expectation. Some downward pressure on the crude market was felt following US government
data showing crude stocks at a record high and the continuation of US refinery strikes.
Monthly Market Report | March 2015 | 04
Things to watch out for in March
With the current situation between Russia and Ukraine still extremely volatile, we should get a sense of
whether the fragile ceasefire will hold.
Jargon buster
BBL: Oil barrel
CCGT: Combined Cycle Gas Turbine
CPI:
Consumer Price Index
EUA: EU Emissions Allowance – linked to the European Union
Emissions Trading Scheme (EU ETS)
GDP: Gross Domestic Product
IEA:
International Energy Agency
ILO:
International Labour Organisation
IMF:
International Monetary Fund
LDZ: Local Distribution Zones
LNG: Liquefied Natural Gas
MCM: Million Cubic Meters
NBP: National Balancing Point
NTS: National Transmission System
OFGEM: Office of Gas and Electricity Markets
OPEC: Organization of the Petroleum Exporting Countries
RO: Renewables Obligation
UKCS:
UK Continental Shelf
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