Seasonal power and gas contracts fell further in July, reaching record lows. Worries over winter gas storage levels were offset by decreasing oil prices, a stronger pound against the euro, and news that an additional 15bcf of gas storage capacity had been approved at the Rough facility.
Annual October ’15 gas fell 2.7% to average 44.7p/th. The winter ’15 gas contract dropped 2.3% to 47.0p/th, reaching a low of 45.8p/th on 23 July. This was the lowest winter contract price since 2010.
Power contracts followed gas prices lower, with the winter ’15 contract down 1.0% to average £45.4/MWh, a record low for the contract.
Prompt power and gas contracts rose until mid-July owing to outages at Norway’s Troll gas field, the largest in Europe, and the St Fergus import terminal. Later falls in prompt contracts were driven both by the return of these facilities and reduced continental exports.
Day-ahead gas average 43.6p/th, 0.3% higher than in June. The day-ahead power contract was up by 1.5%, averaging £42.3/MWh.
Oil prices continued to drop in July. Brent crude oil decreased 9.7% to average $57.7/bl, the biggest monthly drop since January. Prices were weighed down by the deal agreed with Iran to scale back its nuclear programme in return for lifting oil export sanctions, rising US crude stockpiles and a contraction of the Chinese stock market.