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.