During March, prices continued to fall across power and gas markets. Brent crude oil, API 2 coal and EU ETS carbon prices also decreased.
In March, day-ahead gas dropped 20.5% to 41.1p/th, the lowest monthly average in six months, amid lower demand owing to milder temperatures.
Seasonal gas prices moved an average of 5.5% lower. Summer 17 gas went down 9.7% to average 40.4p/th. Winter 17 gas declined 6.8% to average 46.8p/th.
Day-ahead baseload power lost 15.1% to average £42.0/MWh. The month-ahead contract also experienced a loss, down 10.3% to average £42.5/MWh.
Most seasonal baseload power contracts decreased, following the gas market downwards, with an average fall of 3.2%. Summer 17 power went down 6.5% to average £41.2/MWh.
Oil prices drop to lowest monthly average since output cut agreement
Brent crude oil prices declined 6.1% to average $52.7/bl in March, the lowest monthly average in four months, since prior to the OPEC output cut agreement. Prices continued to remain above the $50.0/bl mark for the entire month, and well above the level in March 2016, when prices averaged $39.6/bl.
Reports showed that OPEC-led crude oil output cuts will have to be extended beyond June to successfully support the market. It remains uncertain as to whether countries will be willing to comply with the proposed extended duration of production cuts, which has pushed prices downwards.
API 2 coal prices fluctuated throughout the month, but on average went down 3.2% to $64.9/t. Prices remain well above levels last year when the price averaged $40.8/t in March 2016.
EU ETS carbon prices varied between €4.7/t and €5.7/t, and on average slipped by 1.2% to €5.1/t. On 28 March, prices fell to a new fifteen-week low of €4.7/t. The market is well supplied at present, with the Polish government selling allowances for the first time since last summer. This is holding prices down.
The month-ahead: Mixed weather forecasts and potential rebound of commodity prices
If the OPEC-led oil output cuts are extended beyond June, oil prices may rebound. China may reinstate production limits on coal output, which may lift coal prices, pushing other energy markets higher also.
The latest Met Office forecasts for April show a slow transition to colder and changeable weather over the month, with temperatures returning to average (or above the average) towards the end of the month.