The UK power market was generally bearish in Week 39, with most products losing value between Monday and Friday. The downside was mainly on the back of a weak NBP, which, while volatile throughout, traded down during the same period on most prompt and curve contracts. There were sporadic bull runs on a few days, mainly on the back of plant outages and a tight system, but these were not enough to stop the market’s downturn. Last week’s final price assessment for Week 39 Baseload was £32.25/MWh. The average price for Day-ahead Baseload this week was £34.06/MWh, marking a premium of £1.81/MWh. The contract was generally well-supported throughout the week, and this strength, traders said, was down to a relatively tight system, coupled with a number of outages. These outages caused volatility on the System Buy Price (SBP). While there were days with few spikes on the SBP (such as Monday), Thursday saw it reach over £180.00/MWh, and this was mainly a function of a widely-reported manual shutdown of part of Scottish Power’s Longannet coal-fired terminal. The rest of the prompt softened through the course of the week. Week 40 Baseload traded down £1.30/MWh from Monday to Thursday, while Week 41 Baseload shed £1.50/MWh for the same period. September Baseload’s final assessment before expiry was £25.45/MWh, while Day-ahead Baseload’s closing price during September averaged £30.20/MWh, marking a premium of £4.75/MWh. October Baseload, having reached its highest closing level of £33.00/MWh on Monday, softened on three consecutive days, losing £2.55/MWh by Thursday’s close. This downside was mirrored across the near months, with the result that Q4 ‘07 Baseload lost £2.35/MWh from Monday to Thursday. Traders said this weakening was mostly down to the UK power near curve aligning itself with a softening NBP for the same period. Longer-dated contracts had a variable week. Winter ‘07 Baseload traded down £1.90/MWh from Monday to Friday, while, over the same timespan, Summer ‘08 Baseload traded up £4.65/MWh. All Summer contracts out to 2010 made gains during the week, while all Winter contracts shed value. Traders said the variable movement on the far curve was, again, down to power contracts tracking NBP contracts for the same period. 

The UK’s National Grid has pegged its forecast for Monday’s plant margins at 3,685 MW, which traders said could “squeeze the market”. Furthermore, a number of market participants rumoured that numerous plants would come offline over the weekend for pre-winter maintenance. There is a possibility, they said, that these plants would not come back onto the grid early next week. Aside from the immediate, short-term fundamentals, traders said the market would be driven by movements on the NBP. As such, most gas traders were in bearish mood for next week, in anticipation of flows from Ormen Lange field resuming. Traders estimated that Friday’s Day-ahead prices reflect a fair value for the beginning of next week.