During June, most seasonal gas and power contracts moved higher. Near-term gas contracts experienced losses, whilst near-term power contracts saw mixed movements. API 2 coal and EU ETS carbon prices gained, whilst Brent crude oil prices lowered.
In June, day-ahead gas extended losses, down 10.6% to 35.0p/th, the lowest monthly average in nine months.
Seasonal gas prices increased by an average of 0.8%. In contrast, Winter 17 gas dropped 0.8% to 45.3p/th. Summer 18 gas moved 0.2% lower to 39.3p/th.
Day-ahead baseload power lost 3.4% to average £39.7/MWh. The month-ahead contract rose 2.3% to £39.9/MWh.
Most seasonal baseload power contracts moved higher and on average increased by 1.8%. Winter 17 power climbed 1.7% to £46.2/MWh. Summer 18 power gained 2.1% to £39.5/MWh.
Oil prices drop amid concerns over increasing output and diplomatic tensions
Brent crude oil prices dropped 7.3% to average $47.8/bl in June.
Prices started the month above $50.0/bl, but decreased steadily, amid concerns over increasing US crude inventories, rising output from Libya, Nigeria and the US and rising tensions in the Middle East after Saudi Arabia and other Arab states cut diplomatic ties with Qatar. On 22 June prices fell to $45.2/bl, the lowest price since 14 November 2016.
Reports of high OPEC compliance with production cuts, tropical storm Cindy disrupting US oil operations in the Gulf of Mexico and a weakening US dollar provided some support to prices towards the end of the month.
On average, API 2 coal prices jumped 4.6% to $68.5/t during the month. On Thursday 29 June, prices reached a seven-month high of $70.5/t, as the euro strengthened against the US dollar. Coal prices were pushed higher by increased demand from China and Europe and higher levels of coal-fired power generation in the US. EU ETS carbon prices gained 6.6% to average €5.0/t.
The month-ahead: July temperatures set to be higher than average
Warm weather is expected in July, with temperatures forecast to be above the average for the time of year, according to the Met Office. The highest temperatures are expected across the south and the east of the UK. Towards the middle of the month, the drier, warmer weather could also extend further north.
High temperatures ordinarily lead to lower demand for gas heating, however particularly high temperatures could lead to increased power demand for air conditioning.
