Day-ahead peak power dropped by 38.3% to average £56.4/MWh in December, the largest monthly loss since at least 2011. Meanwhile, day-ahead baseload power fell by 26.3% to average £48.9/MWh, the first monthly loss since August.
On Friday 23 December, the contract reached £44.0/MWh, an 11-week low, with low demand levels over the Christmas holiday period. There was little influence from the French power market, which has driven the UK market in recent months.
In December, day-ahead gas slipped 3.9% to average 46.5p/th. On Thursday 8 December, the contract reached an eight-week low of 41.9p/th, with demand below the seasonal norm.
Seasonal gas prices remained relatively unchanged in December, gaining only 0.1% on average. They are higher than their levels in the same period of last year. Winter 17 gas experienced the largest rise, up 0.5% to average 48.1p/th. By contrast, summer 17 gas lost 1.0% to average 42.4p/th.
On Friday 9 December, gas withdrawals from the Rough storage facility restarted, following restricted operations at the site due to safety checks.
Seasonal baseload power contracts also remained relatively stable, with an average decrease of 0.1%. Summer 17 power experienced the largest fall of 2.2% to average £42.9/MWh.
Oil prices rise on the back of OPEC and non-OPEC production cuts
Brent crude oil prices rose 16.2% to average $54.9/bl in December, with prices above the $50.0/bl mark for the entire month.
Prices went up throughout the month. They reached $57.0/bl on 30 December, the highest price since July 2015. Prices were largely supported by OPEC’s historic agreement from the meeting held on 30 November. At the meeting, OPEC agreed on its first oil output reduction since 2008. The deal also included the group’s first coordinated action with non-OPEC member Russia in 15 years.
API 2 coal went down 6.4% to average $65.8/t, with Colombian coal workers calling off a planned strike. The fall came despite strong physical demand in China. On 8 December, prices reached an 11-week low of $59.2/t.
EU ETS carbon lost 8.0% to average €5.2/t. On 5 December, prices fell to an 11-week low of €4.2/t.
The month-ahead: Potential higher commodity and power prices
The implementation of OPEC and non-OPEC oil production cuts, as well as the potential for colder weather during January (as reported by the Met office), could push commodity and power prices upwards during the month.
