During February, prices generally decreased across gas and power markets. This was largely driven by milder temperatures, which resulted in decreased gas and power demand. By contrast, Brent crude oil, API 2 coal and EU ETS carbon prices increased.
In February, day-ahead gas slipped 3.2% to average 51.6p/th, amid milder temperatures. Summer 17 gas went down 2.7% to average 44.7p/th, while Winter 17 gas fell 1.5% to average 50.2p/th.
Day-ahead baseload power slipped by 7.0% to average £49.5/MWh. The month-ahead contract also experienced losses, and was down 4.4% to £49.4/MWh.
Most seasonal baseload power contracts decreased, following the gas market downwards, with an average fall of 1.2%. Summer 17 power fell by 3.7% to average £44.1/MWh.
Oil prices rise further on the back of strong OPEC production cut compliance
Brent crude oil prices rose 0.9% to average $56.1/bl in February. Prices remained above the $50.0/bl mark for the third consecutive month. They remained well above the level in February 2016, when prices averaged $33.7/bl. Prices were heavily influenced by the output cuts of OPEC and non-OPEC members, which came into action at the start of January and are expected to last through until June.
API 2 coal prices fluctuated throughout the month, but on average went up 0.6% to $67.0/t. On 20 February, prices reached a three-month high of $69.2/t. They remain well above levels last year, having averaged $38.0/t in February 2016.
EU ETS carbon prices varied between €4.9/t to €5.5/t, and on average decreased 2.3% to €5.2/t. The process of backloading allowances ended at the start of 2017. This means that more allowances are now available at auction, which increases supply and lowers carbon prices.
The month-ahead: Unsettled weather forecasts and restricted gas storage injections.
Met Office weather forecasts for March indicate a period of unsettled weather. A rise in wind generation as a result of windy spells could dampen power prices during the month.
Further restrictions to injection at Rough gas storage facility could lead to lower near-term prices due to reduced injection demand as the winter withdrawal period comes to an end. However, future winter prices may be higher amid less storage supply availability.
