Spark spread play looks to be hotting up but who has it right?
Traders have been buying up spark spreads on the back of a predicted Summer squeeze in the UK due to coal plant failing to operate during the Summer, as a result of the LCPD. This is a very dangerous game to play, firstly the LCPD only effects 9 plant, seondly most of the plant would have been off during Summers as demand dropped anyway, and so it was already operating under an peaking policy.
Traders are gambling that this plant being out will force coal plant off and only gas plant can pick up any slack, if the Summer is mild like last year then demands will remain low and the need for gas and the gas power stations will not be that high and so those over paying for the spark spread will be caught out.
It will be interesting to track the changes seen in the spark spread and if they start to get too high some trading houses will sell into the strength.
17 June 2005
"'Curiouser and curiouser,' cried Alice!" Alice and Wonderland read more...
15 February 2005
Curve bounces towards upper range, with bullish activity in the prompt and the gas market. read more...
02 February 2005
Winter 05 more volatile than the Summer. Now traditionally a good time to pick up Summer. read more...
Shale Gas - Latest UK estimates suggest enough for next 11 years
Cuadrilla Resources, the company at the forefront of Britain's Shale gas exploration released its first estimates of the amount of shale gas contained in the rocks of Lancashire. At 200 trillion cubic feet, the estimates are significant to say the least. read more...
22 September 2011
Cuadrilla Resources, the company at the forefront of Britain's Shale gas exploration released its first estimates of the amount of shale gas contained in the rocks of Lancashire. At 200 trillion cubic feet, the estimates are significant to say the least. read more...
Energy Forward Prices continue to gain ground
Despite market participants describing the market as stagnant and directionless, energy forward prices continue to gain ground. Winter 11 power closed the week up at £59.65/MWh while NBP Winter 11 gas finished at 72.20p/therm. read more...
10 June 2011
Despite market participants describing the market as stagnant and directionless, energy forward prices continue to gain ground. Winter 11 power closed the week up at £59.65/MWh while NBP Winter 11 gas finished at 72.20p/therm. read more...
Downward Trend Still in Play
Most contracts in the UK energy markets continued to lose ground this week enforcing the downward trend that has been in play since the start of the month. The Winter 11 contracts closed the week at £57.60MW/h and 68.85p/therm. read more...
13 May 2011
Most contracts in the UK energy markets continued to lose ground this week enforcing the downward trend that has been in play since the start of the month. The Winter 11 contracts closed the week at £57.60MW/h and 68.85p/therm. read more...
Winter 11 - A Slippery Slope
While March was a month of shocks and gains, April seems to have marked the start of a downward trend in the UK power market. The WInter 11 contract is just one example. read more...
06 May 2011
While March was a month of shocks and gains, April seems to have marked the start of a downward trend in the UK power market. The WInter 11 contract is just one example. read more...
The Market in April 2011
In comparison to the activity seen in March – the energy markets seemed relatively sedate shedding some of the value along the way. read more...
28 April 2011
In comparison to the activity seen in March – the energy markets seemed relatively sedate shedding some of the value along the way. read more...
Winter 11 - A Slippery Slope
While March was a month of shocks and gains, April seems to have marked the start of a downward trend in the UK power market. The WInter 11 contract is just one example. read more...
06 May 2011
While March was a month of shocks and gains, April seems to have marked the start of a downward trend in the UK power market. The WInter 11 contract is just one example. read more...
Where's the certainty?
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
23 December 2009
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
Dong buy Severn Power
The Danish energy utility, Dong have bought one part of Carron Energy. read more...
10 March 2009
The Danish energy utility, Dong have bought one part of Carron Energy. read more...
Green Light for additional 3.92GW of Capacity
The development of 3.92GW of power plant capacity was given the green light yesterday by the Department for Energy & Climate Change. read more...
06 February 2009
The development of 3.92GW of power plant capacity was given the green light yesterday by the Department for Energy & Climate Change. read more...
A sliding Prompt
A comfortable system in terms of supply margins left the prompt power market sliding. read more...
14 November 2008
A comfortable system in terms of supply margins left the prompt power market sliding. read more...
Two Years On...
This week marked the 2nd Anniversary of the collapse of Lehman Brothers, perhaps the most significant collapse of the banking crisis. Ironic perhaps then that the anniversary coincided with the publication of stricter international banking rules requiring banks to hold larger cash reserves. How will these banking regulations impact energy companies? read more...
17 September 2010
This week marked the 2nd Anniversary of the collapse of Lehman Brothers, perhaps the most significant collapse of the banking crisis. Ironic perhaps then that the anniversary coincided with the publication of stricter international banking rules requiring banks to hold larger cash reserves. How will these banking regulations impact energy companies? read more...
Falling Wholesale Prices but what about the tariffs?
Even though the power wholesale market is following the falls seen in gas (Winter 09 Baseload closed the week down £0.20MWh at £38.70), and is now at levels where supplier tariffs must be under pressure, any tariff reduction announcements are unlikely to be made anytime soon. read more...
18 September 2009
Even though the power wholesale market is following the falls seen in gas (Winter 09 Baseload closed the week down £0.20MWh at £38.70), and is now at levels where supplier tariffs must be under pressure, any tariff reduction announcements are unlikely to be made anytime soon. read more...
Who will have the last laugh on the Green Agenda?
The Government’s announcement last week on the projected state of the UK energy industry is interesting and informative and demonstrates their willingness to impose a green agenda - but at what cost? read more...
24 July 2009
The Government’s announcement last week on the projected state of the UK energy industry is interesting and informative and demonstrates their willingness to impose a green agenda - but at what cost? read more...
Ofgem enquiry completed
Ofgem have completed their competition probe and not really delivered for business. read more...
18 March 2009
Ofgem have completed their competition probe and not really delivered for business. read more...
Imera secures new inter connector
Imera an Irish consortium has secured a good growth opportunity for 2011. read more...
07 December 2008
Imera an Irish consortium has secured a good growth opportunity for 2011. read more...
February Monthly Round Up
February was dominated by news of unrest spreading throughout the Middle East and this had a direct impact on all aspects of the UK energy market with gains seen in the UK Power and NBP Gas curves. read more...
25 February 2011
February was dominated by news of unrest spreading throughout the Middle East and this had a direct impact on all aspects of the UK energy market with gains seen in the UK Power and NBP Gas curves. read more...
Where has the market got left to go?
Clean spark spread prices in Winter’s 11 and 12 are trading below £5.00MWh (closing at £4.87 and £4.59 respectively). The equivalent Summer’s are not that much stronger asking some to ask is there anymore downside left at these levels. read more...
03 September 2010
Clean spark spread prices in Winter’s 11 and 12 are trading below £5.00MWh (closing at £4.87 and £4.59 respectively). The equivalent Summer’s are not that much stronger asking some to ask is there anymore downside left at these levels. read more...
Where's the certainty?
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
23 December 2009
There was a time when you could quite comfortably forecast the running order of generation plant in the UK - but 2009 has seen a dramatic turn in the stack! read more...
Drax up against it
Drax profit margins fall as competition will only get harder. read more...
05 March 2008
Drax profit margins fall as competition will only get harder. read more...
Summers Lack Shape
Oil price volatility, credit constraints and the Lehman collapse has all badly affected liquidity further out on the gas curve. read more...
27 October 2008
Oil price volatility, credit constraints and the Lehman collapse has all badly affected liquidity further out on the gas curve. read more...
Energy Intensives Users Group hint that Summer is a concern
The EIUG make some interesting observations but it is clear that the relationship between the spark and dark spread is of growing importance. read more...
30 January 2008
The EIUG make some interesting observations but it is clear that the relationship between the spark and dark spread is of growing importance. read more...
Curve anomalies cause high Summer 08
Sometimes the sum of the parts does not always equal the whole. Players must look at arbitrage between months and seasons. read more...
09 January 2008
Sometimes the sum of the parts does not always equal the whole. Players must look at arbitrage between months and seasons. read more...
Prompt prices rise as interest turns to the back of the curve
Prompt still maintains traders affections. read more...
12 December 2007
Prompt still maintains traders affections. read more...
Backend of curve remains strong
Market continues to fall but back end looks strong. read more...
29 November 2007
Market continues to fall but back end looks strong. read more...
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