The gas and power markets in the UK have opened “reasonably flat” again this morning.
According to the daily market report from npower, support continues to come from oil markets where Brent is trading just below $37/Bbl (£26.5/Bbl).
Tim Carter from the Optimisation Desk said: “Oil prices climbed to their highest closing price in seven weeks as market players overlooked poor Chinese manufacturing data and instead chose to focus on data demonstrating a fall in US and OPEC production that might elevate some of the oversupply in the market.
“Supply from the US dropped by 43,000 barrels in December while OPEC output in February fell by 280,000 billion barrels per day according to Reuters surveys whilst Bloomberg surveys peg the fall closer to 79,000. Ultimately still a long way short of the estimated two million barrels per day surplus but heading in the right direction to encourage bullish bets on prices.”
The warmer wet weather is helping reduce demand, which has led to a fall in demand for CCGT.
The system is nearly 11mcm oversupplied today.
The UK Government has announced plans to bring forward the Capacity Market auction and tender for more volume to address the supply crunch.
“This could go some way to addressing the current undersupply forecasts for the coming winters as the current mechanism has failed to incentivise new build technology while coal plants have been forced to close due to high carbon taxes and lower wholesale prices eroding margins,” Mr Carter said.