During January, prices generally rose across commodity and power markets. This was largely driven by lower temperatures leading to increased gas and power demand. In January, day-ahead gas climbed 14.7% to average 53.4p/th.
Seasonal gas prices moved an average of 5.3% higher. Summer 17 gas experienced the largest rise (of 8.4%) to 45.9p/th. Winter 17 gas moved 6.0% upwards to average 51.0p/th.
In January, day-ahead baseload power rose by 8.7% to average £53.2/MWh. The month-ahead contract also experienced gains, up 3.5% to £54.8/MWh. On 26 January, peak electricity demand on the transmission network reached 51.7GW, the highest demand level seen this winter so far.
All seasonal baseload power contracts increased, following the gas market upwards, with an average rise of 4.6%. Summer 17 power went up 6.7% to average £45.8/MWh.
Oil prices continue to rise on the back of OPEC and non-OPEC production cuts
Brent crude oil prices rose 1.4% to average $55.7/bl in January. Prices remained above the $50.0/bl for the second consecutive month, and were well above the level seen in January 2016, when they averaged $32.1/bl. Prices were heavily influenced by the output cuts of OPEC and non-OPEC members, which came into effect at the start of January and are expected to last through until June.
API 2 coal prices fluctuated throughout the month, but on average went up 1.2% to $66.7/t. On 18 January they hit $69.0/t, an eight-week high. Prices rose in January amid concerns that another cold snap in February could boost demand and freeze supply routes. In contrast, the Chinese New Year celebrations (which begin on 28 January and typically last three weeks) could lead to a drop-off in Chinese coal demand moving into February.
EU ETS carbon prices varied between €4.8/t to €6.3/t, and on average increased 2.0% to €5.3/t. Prices started the month above €6.0/t, but soon dipped and continued to fluctuate.
The month-ahead:
- Potential colder weather ahead and further partial supply outages at Rough.
- Cold snaps are forecast by the Met Office during February, which could lead to spikes in power and gas prices.
- Additionally, further partial supply outages at Rough gas storage site means less supply available from storage.
