Innovative Energy Consultancy Ltd
Innovative Energy Consultancy Ltd

Gas and power dip on strong supplies

Despite rising carbon, coal and oil prices, power contracts were down across the board in May.  

The annual October 15 contract averaged £44.6/MWh, a 1.1% reduction from the average April price.  The system was comfortably supplied and demand has fallen as summer approaches.  The day-ahead contract averaged £41.1/MWh over the month, down from £43.9/MWh in April.

A healthy supply outlook also heped to reduce gas prices over the month.  The annual October 15 contract averaged 46.7p/th in May, a 1.9% reduction from April’s average price (£47.6p/th).

The day-ahead contract dropped 5.6% to average 44.2p/th as rising temperatures resulted in lower demand.  Gas prices could have fallen further had they not been supported during May by an increase in gas demand for power generation.

Brent crude oil averaged $65.9/bl in May, a rise of 9.1% from April.  Prices were pushed upwards during the month by continuing conflict in the Middle East, which raised security of supply concerns, and decreases in US inventory levels, which may signal an economic upturn. However, the International Energy Agency’s monthly Oil Market Report raised supply forecasts for the rest of 2015, leading to continuing oversupply fears, which weighed on prices.

The coal market remains oversupplied following a drop in demand from China and the US.  Prices showed a month-on-month increase, averaging $57.6/t in May.  This is a 1.4% gain from April, but 30.3% below the May 2014 average.

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