Market Comments (09/03/10): The front season found some limited support on Monday with the general consensus that near term weather was supporting the contract. Power fundamentals were bearish across the board as gas prices continue a weak run and coal prices slid. Coal stocks are near record highs for this time of year, while cheap Russian coal has been sold into Europe. Summer’10 closed up to £34.36/MWh while the rest of the curve was near unchanged. With such weak fundamentals it has been argued that there should be downside to the curve but the long-term direction remains unclear. The Day-ahead contract was bearish closing at £35.40/MWh on the OTC market, with the cold weather failing to support the contract significantly. System prices reached a modest £116.06/MWh as the UK power grid looked comfortable for the majority of the day. This pattern looks set to continue, in the near term, as the weather becomes milder towards the end of the week.

Market Comments (09/03/10): The prompt firmed further on Monday with demand levels at their highest since early February. Demand reached 405mcm by 11:00 and the system struggled to get in balance from that point, remaining 3mcm short by the close of play. Within day and day ahead followed a similar trading pattern yesterday, rallying upwards from around 9am all the way to the end of the session. Day ahead gained 0.825p/th to finish at 33.78p/th on the expectation of continuing cold weather today. However the weekend and WDNW contracts lost ground, 0.55p/th and 0.65p/th respectively, closing well below the day ahead contract at 31.80p/th and 31.75p/th a piece. Flows had to be strong yesterday and they were in most part, Langeled providing 68mcm and South Hook in excess of 40mcm. However Barrow South, which delivers gas from Centrica's Morecombe South swing field, turned down at 11:00 causing the system to drop short. Traders commented that it may require a higher price to turn up, however some speculated that there could be field issues. Front month Apr 10 was subject to significant trading interest yesterday. It moved up throughout the day in general, but rallied strongly towards the end to close at 30.38p/th, a 0.74p/th increase. This represented the biggest movement of all curve contracts which in general were tame and range bound on low liquidity. Demand this morning is 399mcm and the system is 5mcm short.