Innovative Energy Consultancy Ltd
Innovative Energy Consultancy Ltd

Gas and power reach new lows

Annual power and gas contracts were down in June. 

The annual October ’15 gas contract initially rose, reaching a high of 47.0p/th before falling to an average of 46.0p/th, 1.5% lower than in May.  The initial rise was due to worries over the imposed Groningen production cap, limiting the supply outlook; however, LNG and Russian supplies were able to compensate for losses.  The winter ’15 power contract followed lower, dropping 0.6% to average £45.9/MWh – the lowest level since the contract opened.

Spot power and gas contracts also saw an early rise, as gas generators were running at their highest level in many months – there was a big decrease in both wind and coal powered generation.  The Greek debt crisis later caused a weakening of the euro versus the pound, making both gas and power imports much cheaper, leading to a decline in contracts.

Day-ahead gas averaged 43.5p/th, the lowest since August 2014.  The day-ahead power contract averaged £41.6MWh, a 1.2% rise from May.

OPEC leaders met in Vienna on 5 June and decided not to cut oil production levels, causing Brent crude oil to fall 2.7%, averaging $64.0bl.  In addition, surprise US inventory levels reported by the IEA have contributed to lower prices.  Sanctions on Iranian oil exports may also be lifted, as a deal is being negotiated over Iranian nuclear development.  Brent crude oil finished the month at $62.6bl.

API coal rose 1.5% this month to average $58.5t, but 26.6% lower than this time last year.

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