Innovative Energy Consultancy Ltd
Innovative Energy Consultancy Ltd

Falling gas prices continue

UK energy markets saw mixed trends during March.  Despite a small recovery in oil prices, seasonal gas contracts continued to fall.  Most seasonal electricity prices also declined, while day ahead power prices were higher.

Seasonal gas contracts remained at their lowest levels since 2007, as a strong UK gas supply outlook offset rising oil prices.  LNG supplies to the UK were at a five-year high early in the month, weighing on prices.

Seasonal power contracts were mixed despite the rise in gas prices.  Summer 16 power gained 0,4% to £31.6/MWh while winter 16 power came despite tightening capacity margin forecasts for next winter as a result of a number of coal-fired power stations having closed.

Spot power prices were higher in March.  Day-ahead power gained 1.1% to average £34.3/MWh.  The contract rose as lower wind output, which fell 65% in the month, outweighed falling electricity demand.  Day-ahead gas was down 0.5% to 29.6p/th.

The price of Brent crude oil increased 17.7% to average $39.6/bl in March.  Prices rose as news emerged that OPEC and non-OPEC nations had agreed to meet in early April to discuss a further freeze on production.  However, the price did begin to slide in the latter stages of the month as US crude inventories hit record high levels and traders lost faith in the proposed supply freeze after Iran withdrew its support.

EU ETS carbon fell 5.4% to average €4.9/t.  Prices are currently 36.1% below for the same period last year (€7.5/t)

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