Gas
Winter 2018 prices started the month around 50.35p/th and then rose to 53.55p/th by the middle of the month as lower than normal temperature forecasts kept emerging across Europe. This pressure was despite the UK gas system forecast to close long throughout the month, meaning that there was enough gas in the system.
Winter 2018 prices dropped back to 52.50p/th towards the end of week 3, as 6 LNG tankers were forecast to arrive in the UK to alleviate pressure on storage.
Towards the end of the month pricing was back up 53.45p/th as cold weather came back into focus and unplanned outages hit supply.
Electricity
The Electricity market followed the Gas one throughout the month as cold weather drove pricing upwards. Taking pricing for winter 2018 from £49.18/MWh to £52.85/MWh.
Downsides to the pricing were led by strong renewable generation and brief periods of warmer weather.
Fundamentals
Oil has seen a rise of $5/bbl ending at just under $70/bbl. This was driven by Russia committing to the OPEC pact, even if it means output cuts until 2019. US Shale oil production continued to be high, providing some downward pressure, but oil has held on to its gains and potential conflicts in Syria could see this increasing further.
Carbon prices reached a 6 year high at €14.08/tCO2e.
Outlook
The weather outlook finally looks like it will bring good news and temperatures should return to seasonal normal levels which will reduce some of the weather risk. Moving towards spring and summer we should see more solar generation and this will take some pressure off gas fired generation. There could be some very strong fundamentals driven by the world vs Russia conflicts that are starting to take place.
For further discussions about the markets and to discuss strategies, please contact Adam Throup, [email protected].
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