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May 22, 2018: Apollo Energy Ltd: Energy Market Analysis - 22-05-2018

NEWS BITES - PRIVATE COMPANIES

Gas Power

Market Close Market Close

Outages in the UKCS and Norway continued to restrict supply levels and provided support to prices at the front of the gas curve yesterday afternoon. The return of the North Morecambe gas field was postponed for another 4 days, while St Fergus was pushed back to tomorrow. Weak demand levels limited the gains, while a rise in EUA carbon prices helped towards increases at the back of the curve. Despite lower demand levels and improved renewable generation, near-curve power prices moved higher yesterday with direction coming from higher gas contracts. Meanwhile, stable oil and coal markets did little to restrict upward movement at the back of the curve with prices instead following bullish carbon contracts.

Market Open Market Open

Contracts along the near curve continue to climb higher this morning with unplanned outages continuing to offer support. However, demand levels sit below the seasonal norm and the system is around 5mcm long, providing some resistance to the bulls. Further out, coal and oil markets have rebounded and carbon contracts continue to strengthen, resulting in gains at the back of the curve. Healthy solar and hydro production has limited CCGT demand today, while wind levels are almost unchanged from yesterday. However, the warm weather has resulted in increased cooling demand, helping the prompt move higher. The rest of the near-curve has been pushed higher by stronger gas, while the back of the curve has followed rising coal and oil markets.

For a breakdown of the current generation mix visit our Power Generation Insights page.

Brent Summary

Brent 1st-nearby prices remain close to a 3.5 year high with support provided by the recent elections in Venezuela and on-going tensions between the US and Iran which could both have ramifications on global oil supply.

1-year forward prices

Market close data has revealed that the 1-year forward price for both commercial gas & commercial electricity increased strongly ' closing at 58.78ppt and Pound57.34/MWh, respectively.

Today's prices can also be found in an easy to read table on our 'current UK energy price' page.

INDEX

SECTION 1 APOLLO ENERGY LTD PROFILE

SECTION 2 PRESS RELEASES: 2018

SECTION 3 OTHER NEWS: 2018

SECTION 1 APOLLO ENERGY LTD PROFILE

1.1 ACTIVITIES

Apollo Energy was established in 2001 - and right from the very start we have prided ourselves on forging long-term relationships with our growing client base.

As energy consultants, the company's directors have over 50 years' experience working in various sectors of the utilities industry; so we don't fall short when it comes to knowledge of the market. On top of this, we have developed strong relationships with the majority of industrial and commercial energy suppliers - so we can offer the best possible service when it comes to accessing and offering a range of solutions and contracts.

This dedication towards providing our clients with the best possible service has led to successful year-on-year growth for the business.

1.2 SUMMARY

PermID: 4296630945

Website: http://www.apolloenergy.co.uk

SECTION 2 PRESS RELEASES: 2018

May 21: Apollo Energy Ltd: Apollo Energy wins Government supplier status for its Bureau Services

Public sector bodies and organisations will be able to procure Apollo Energy's Bureau Services to monitor and control utilities usage and costs.

The framework has been created for a period of three years, with an option to extend for a fourth year.

Public sector bodies from hospital trusts and schools to prisons and administrative centres will be able to access the following services from Apollo Energy under the framework agreement.

Source: Company Website

March 23: Apollo Energy Ltd: Beast from the East ' what it means for your tender renewals

Below average temperatures tightened gas supplies and demand was significantly above the seasonal norm with the National Grid requesting additional gas flows from Europe.

Storm Emma and the Beast from the East resulted in freezing temperatures that were significantly below what's normally expected for the time of year.

Cold outlooks and drops in temperatures impacted on prices and there was significant volatility in the market place as winter seemed pretty determined not to loosen its grip.

UK hit by snow

According to the Met Office's Climate Summary for February, the coldest temperature recorded was -11.7C in Hampshire and the deepest snow in County Durham at a depth of 21cm.

So as we prepare for the official start of British summertime and hopefully put winter well and truly behind us, what does all the cold weather mean for contract renewals?

When our energy consultants go out to the marketplace to re-tender for gas and electricity contracts, past consumption plays a key part in assessing future need.

A severely cold winter can artificially inflate volume profiles and impact on the negotiation of future contracts. Supplier contracts may include a take or pay clause, usually 80/120%, this means that if you don't use 80% of the annual quantity which is based on the last 12 months usage, then you may be expected to pay up to 80% of the usage even though you haven't used the gas or electricity. If you go over 120% of your contracted volumes you may be expected to pay for the usage over 120% at market rates, not your contracted rates. There are ways to negotiate with suppliers in these circumstances which eliminate or minimise the impact of these costs.

For clients using our Bill Validation, we can be much more informed and accurate with budgeting and forecasting. Our bespoke software not only reviews and recalculates each component of an invoice and matches contract rates and consumption with invoice details, it also flags where usage exceeds or falls below what we would be expecting for the given billing period.

SECTION 3 OTHER NEWS: 2018

May 23: Apollo Energy Ltd: Energy Market Analysis - 23-05-2018

Gas Power

Market Close Market Close

Near-curve gas prices were dictated by unplanned outages yesterday and recorded strong gains despite below average demand levels. Support was also provided by rising fuel costs, with carbon and coal displaying significant upward movement and Brent recovering from losses incurred in the previous session. Power prices recorded strong upward movement on Tuesday with prices at the back of the curve taking direction from rising carbon and coal markets. Near-curve prices followed their gas counterparts which were supported by supply constraints, with warm temperatures also resulting in higher cooling demand.

Market Open Market Open

Day-Ahead gas has decreased this morning as the system is 25mcm long due to low demand levels and improved flows via the Langeled pipeline. Warm weather is expected to continue over the next 10 days and healthier renewables should weigh on CCGT demand, resulting in losses across the near-curve. Further out, prices have followed bearish coal and carbon markets. Healthy solar power has helped to weigh on the prompt this morning, helping the UK cope with increased cooling demand at a time when wind levels are quite low. The losses have filtered through to the rest of near-curve as gas prices have eased, while weaker fuel markets have weighed on contracts at the back of the curve.

May 21: Apollo Energy Ltd: Energy Market Analysis - 21-05-2018

Gas Power Market Close Market Close Gas prices moved down on Friday afternoon as the demand forecast was low and oil and coal markets moved down. Warm temperatures were expected to weigh on residential demand over the weekend and the start of this week. In terms of supply, Norwegian flows were reduced by unplanned outages but exports from the UK to Belgium decreased. Power contracts shed from their price on Friday with bearish pressure provided by falling coal, gas and oil markets. The 7-day weather forecast for the UK pointed towards above average temperatures which could lead to a rise in cooling demand, while weaker renewables restricted downward movement on the prompt. Market Open Market Open Warm weather is set to continue until next week at least, potentially reaching 30degc in some parts of the UK which will keep LDZ demand low; this has helped contracts across the near-curve to record a loss. Further out, contracts continue to take direction from fuel markets and have moved down, with coal and oil both weakening from Friday. Healthy solar power is helping to make up for weak wind levels but this has failed to prevent the prompt from recording a small loss. The rest of the near-curve has followed gas and moved down, as gas demand is below the seasonal average.

May 18: Apollo Energy Ltd: Energy Market Analysis - 18-05-2018

Gas Power

Market Close Market Close The system was tighter yesterday due to unplanned outages which continue to limit Norwegian flows to the UK. The LNG outlook is also weak which resulted in an increase in storage withdrawals. As a result of these supply constraints, prices across the near curve moved higher, while bullish oil prices supported the back of the curve.

Rising coal, gas and oil markets helped towards gains across the power curve on Thursday, with a weaker renewable generation forecast providing additional bullish pressure to the prompt. Warm weather should keep demand low over the next week or so but this did little to dampen the upward trend.

Market Open

Market Open

Gas prices have eased this morning as the system is balanced and the demand outlook is weak due to above average temperatures. Oil prices have also moved down slightly, limiting any upward movement at the back of the curve. Meanwhile, return dates have now been given to outages in Norway, with Kristin expected back on 22nd and Kvitebjorn set to return on the 26th. A healthier supply picture for gas and low consumption levels helped prompt power prices move down this morning, with improved renewables also expected at the start of next week.

May 17: Apollo Energy Ltd: Energy Market Analysis - 17-05-2018

Gas Power Market Close Market Close Gas prices opened lower on Wednesday but unplanned outages continued to restrict flows into the UK and helped contracts on the near-curve recover as the session progressed. Issues at the North Morecambe, Kvitebjorn and Kristin fields, in addition to reduced output at the Bacton Seal terminal combined to limit supply levels. However, demand levels were below the seasonal norm and fuel markets stabilised, providing resistance to the bulls. Despite a bullish opening, power prices displayed minor gains towards the end of yesterday's session. A rebound in coal prices and weaker gas supply were the main factors behind gains which were displayed across the curve. However, a lower demand forecast helped to cap upward movement on the prompt. Market Open Market Open The system has opened 2mcm short this morning despite weak demand levels, as outages in the UKCS and Norway continue to reduce flows, resulting in higher storage withdrawals. This has led to strong upward movement across the near-curve, while a rebound on coal and oil markets have supported prices at the back of the curve. Renewable levels remain weak today but low consumption levels (due to warm weather) have reduced CCGT demand.

May 16: Apollo Energy Ltd: Energy Market Analysis - 16-05-2018

Gas Power Market Close Market Close Gas prices displayed mixed movement yesterday with coal and oil markets moving in opposite directions in the afternoon. Following a bullish opening, a warmer weather outlook and an oversupplied system helped towards losses in the afternoon, with a rise in Norwegian flows also a factor. Power contracts mirrored their gas counterparts yesterday, opening at a strong premium before moving down as the session progressed. Wind levels were forecast to improve slightly today, while gas supply was also expected to increase, helping to weigh on the near-curve. Market Open Market Open The prompt has opened lower this morning on the back of weaker coal and carbon markets, while oil is unchanged from yesterday's session despite volatility in the afternoon. Next week's temperatures are expected to be above the seasonal norm which will weigh on demand levels, contributing to losses on the rest of the near-curve. Wind generation has improved today but is expected to be inconsistent over the coming week, with a decrease forecast for tomorrow, resulting in a stronger prompt this morning. A warm weather outlook has pressured down the rest of the near-curve, while weaker fuel markets have contributed to downward movement further out.

May 15: Apollo Energy Ltd: Energy Market Analysis - 15-05-2018

The gas curve remained bullish on Monday with rising oil prices and tighter supply levels providing support. Langeled flows decreased in the afternoon due to three unplanned outages, resulting in an undersupplied system. Cooler weather is also expected towards the end of the week which will lift demand. Power prices were pushed higher by other fuel markets yesterday, with gas, coal and oil all displaying strong increases. Renewable levels were forecast to remain weak for the coming days, while a drop in temperatures is expected over the weekend, providing additional support to the front of the curve. Market Open Market Open An oversupplied system and lower demand resulted in some downward movement at the opening of the session but the bulls have since returned. Unplanned outages continue to support the prompt, while rising oil and carbon have contributed to gains across the curve. In terms of supply, exports via the IUK pipeline stand at 31mcm, storage withdrawals are at 9mcm and flows via the Langeled pipeline are around 41mcm.

Source: Company Website

May 14: Apollo Energy Ltd: Energy Market Analysis - 14-05-2018

Gas prices were bullish on Friday with an expected rise in gas demand supporting contracts at the front of the curve and stronger coal helping towards increases further out. APi2 coal climbed higher on the back of a supply shortage in South Africa and import restrictions in China. Power contracts moved higher on Friday with support provided by rising coal and gas markets. A drop in renewable power levels was forecast for today which offered further strength to the prompt, while a slightly cooler outlook for this week helped towards gains on the rest of the near-curve. Market Open Market Open The UK gas system has opened 5.8mcm long this morning with demand levels rising by 20mcm compared to Friday. This increase in demand has helped near-curve prices climb higher, with support also provided by an expected cooler spell towards the end of the week. In terms of supply, Langeled flows are up by 5mcm but LNG send-outs show no improvement despite a delivery at South Hook over the weekend.

Source: Company Website

May 11: Apollo Energy Ltd: Oil and Carbon markets surge higher

Tensions in the Middle East continue to impact the oil market, as conflict between Syrian-based Iranian forces and the Israeli army has led to the US's withdrawal from the Iran nuclear deal.

Officially known as the Joint Comprehensive Plan of Action, the deal imposes sanctions on the development of nuclear technology in the country, also impacting other energy sources.

The US withdrawal from this pact could jeopardise business deals and trading between Iran and other nations which could see up to 1 million barrels of Iranian oil taken off the market.

Supply levels could come under further strain if tensions between Israel and Iran worsen, with the threat of direct war between the two nations an on-going concern.

This news further supported an already bullish market, with efforts made by OPEC nations to cut production contributing to gains in previous months; Brent now trades above $77.4/b.

Meanwhile, EUA carbon prices are also on the rise, hitting a 7-year high yesterday as demand has exceeded supply, with additional support also coming from other fuel markets. The carbon contract due to expire in 2019 has increased by 4.3% to trade at EUR14.77/tn.

Source: Company Website

PermID: 4296630945

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