Platts: U.K., European Natural Gas Prices Dropped Further in June

LONDON, July 3, 2014 /PRNewswire/ -- Day-ahead natural gas prices in the U.K. and continental Europe continued to fall in June after reaching multi-year lows in May, according to data just released by Platts, a leading global energy, petrochemicals and metals information provider.

U.K. day-ahead natural gas prices were down 13% month over month and down 35% year over year, while day-ahead gas prices on the Dutch TTF – continental Europe's most liquid natural gas trading hub – were down 9% month over month and 34% year over year.

European natural gas demand in Platts' sample of the U.K., Belgium, Italy, the Netherlands and France fell 11% from May's 14.9 billion cubic meters (Bcm) to June's 13.3 Bcm. On a yearly comparison, demand for the sample markets in June was down 1% from 13.5 Bcm in June 2013.

"The continued slide in U.K. spot gas prices came on the back of high storage levels and ample supplies, including the regular deliveries of liquefied natural gas from Qatar," said Alex Froley, Platts energy analyst. "Also, export potential for U.K. gas was hampered midmonth by a two-week outage of the U.K.-Belgium Interconnector pipeline." 

Lower gas prices have been encouraging the use of natural gas-fired generation in the U.K. Gas-fired power plants consumed an average 48 million cubic meters per day in June 2014, up 14% from June last year, and the highest total since February 2013.

In the electricity markets, Platts Continental Power Index* (CONTI) fell 2.75% in June to €31.82 per megawatt hour (/MWh). This compared to the May level of €32.72/MWh and is down more than 7% year over year.

While benchmark market Germany was stable with an average price of €31.13/MWh in June it was second only to France as the cheapest in European markets assessed by Platts. Big additions of coal-fired capacity in recent days have served to extend current oversupply.

"Two coal-fired power stations have come on line in recent days," said Andreas Franke, managing editor of Platts European Power Daily. "A 764-MW unit at RWE's new Hamm plant started commercial operation July 2, while EnBW's 912-MW RDK 8 plant at Karlsruhe entered operation June 23. Utility officials say new thermal plant, whether gas- or coal-fired, will struggle to make a decent financial return in the wholesale market at current price levels."

Prices in the U.K. power market continued their decline in June, down 8% month over month and down 23% year over year. Lower natural gas prices and higher wind power output have helped suppress U.K. spot prices this year at the same time the summer months are beginning to show the price effects of growth in solar power capacity.

U.K. solar capacity has reached 4.5 gigawatts (GW), up from 2.7 GW at the end of 2013, according to the Solar Trade Association. On the longest day of the year, June 21, with 16 hours of daylight, solar would have met nearly 4% of U.K. total demand, the Association said.

NOTE: All figures are monthly averages of daily day-ahead contract prices as assessed by Platts.

*Platts Continental Power Index (CONTI) is a demand-weighted baseload average of day-ahead contracts assessed in Germany, Switzerland, France, Belgium and the Netherlands. The Platts U.K. assessments reflect day-ahead contracts assessed for firm delivery of power on the high voltage network of England, Wales and Scotland, and at the National Balancing Point for gas. The Platts assessments reflect prices as determined between buyer and seller in the open physical markets.

For more information on electric power or the methodology used by Platts in its power assessments, visit the Platts website www.platts.com.

About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets.  Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency.  Customers in more than 180 countries benefit from Platts' coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of McGraw Hill Financial (NYSE: MHFI), Platts is based in London with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.

About McGraw Hill Financial: McGraw Hill Financial (NYSE: MHFI), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and McGraw Hill Construction. The Company has approximately 17,000 employees in 29 countries. Additional information is available at www.mhfi.com.

SOURCE Platts