There was a general bullish trend in the energy markets during April with most gas and power contracts experiencing gains.
Seasonal gas prices moved away from the seven-year lows of last month, gaining 2.9% on average, as all contracts improved. Winter 16 gained 0.7% to average 33.5p/th. Summer 17 lifted 1.3% to 30.5p/th. Winter 18 saw the largest increase, up 4.4% to 37.2p/th. Prices were supported by rising oil prices. Day-ahead gas moved 2.1% lower to average 29.0p/th as warmer weather reduced demand.
Seasonal power contracts all improved during April. Winter 16 power followed its gas counterpart higher, lifting 0.7% to a four-month high of £37.9/MWh, amid tightening supply margins. Summer 17 power rose 2.9% to £36.6/MWh. Summer 18 saw the biggest gains, climbing 5.9% to £31.8/MWh. Day-ahead power followed its gas counterpart lower, losing 1.2% to average £33.9/MWh.
Oil prices gain 7.3% as non-OPEC production falls
The cost of Brent crude oil increased 7.3% to average $42.5/bl in April, reaching a five-month high of $46.8/bl on 27 April. The price of oil rose despite the failed supply freeze talks between OPEC producers and Russia on 17 April. A fall in non-OPEC production, particularly in the US, helped to support prices. Non-OPEC production is currently at a 25-year low.
API 2 coal grew 6.4% to average $43.3/t. Coal markets remained oversupplied throughout April. However, a number of high profile bankruptcies, most notably Peabody (the world’s largest private coal producer), has pressured prices higher as production levels dropped.
EU ETS carbon jumped 13.6% to average €5.6/t, hitting a near three-and-a-half month high of €6.9/t on 27 April.
However, despite the large rise, prices are 21.4% lower than last year’s levels (€7.1/t).
The month ahead: tightening supply margins
Non-OPEC production is forecast to keep falling in the months ahead. The International Energy Agency expects that the market will move towards re-balancing by the second half of this year. The price of oil may continue to rise in response.