Innovative Energy Consultancy Ltd
Innovative Energy Consultancy Ltd

Falls in near-term gas and power markets

During April, prices continued to fall in the gas and power markets, with all gas contracts lowering and the majority of power contracts following downwards. In contrast, Brent crude oil and API 2 coal prices increased.

In April, day-ahead gas slipped 2.8% to 39.9p/th, the lowest monthly average in seven months.

Seasonal gas prices moved an average of 0.4% lower. Winter 17 gas declined 0.6% to 46.5p/th. Summer 18 gas fell 0.2% to 40.3p/th.

Day-ahead baseload power lost 1.1% to average £41.5/MWh. The month-ahead contract also experienced a loss, down 2.4% to average £40.5/MWh.

Seasonal baseload power contracts experienced mixed movements, but on average decreased by 1.6%. Winter 17 power slipped 0.1% to £46.0/MWh.

Oil prices gained at start of month but retreated at the end

Brent crude oil prices rose at the start of April, supported amid optimism that OPEC and other crude oil producing nations will extend production cuts beyond June. However, prices then retreated towards the end of the month. On average prices gained 2.6% to $54.1/bl.

On 27 April, Brent crude oil dropped to $50.7/bl, a four-week low, driven lower by continued global oversupply, an increase in US gasoline inventories and as Libya’s largest oilfield, Sharara, came back online following protest blockages. Prices continued to remain above the $50.0/bl mark for the entire month, and well above the level in April 2016, when prices averaged $43.0/bl.

On average, API 2 coal prices rose 1.8% to $66.1/t during the month. Prices remain well above levels last year when the price averaged $43.7/t in April 2016.

EU ETS carbon prices varied between €4.6/t and €5.1/t, and on average slipped by 5.8% to €4.8/t. On 26 April, EU ETS carbon lowered to €4.6/t, a five-month low.

The month-ahead: Mixed weather forecasts and lower summer gas demand

The latest Met Office forecasts for the UK are mixed, with warmer southern conditions and colder northern and eastern conditions early in May. Later in the month, more unsettled and colder conditions are expected.
National Grid reported in its Summer Outlook report that total British gas demand this summer is expected to be down nearly 6% on last year, due to reduced storage injections and reduced demand from the generation sector.

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