Gains in commodity markets created a bullish trend in the GB energy market in July, with all gas and power contracts experiencing gains.
Centrica announced that it had extended the closure of its Rough gas storage site, the UK’s largest, until spring 2017 following the discovery of an issue with one of its wells. This has caused concerns around storage supplies for the coming winter, and has pushed up the winter 16 contract.
The contract has increased by 10.2% to average 44.7p/th, a new nine-month-high. Meanwhile, seasonal gas prices gained 9.0% on average, despite a fall in oil prices. Summer 17 gas was up by 7.8% to 40.4p/th.
Day-ahead gas moved 0.5% higher to average 34.5p/th.
Seasonal baseload power contracts on average climbed 6.7% in July, following their gas counterparts higher. Winter 16 power was up 7.7% to average £47.2/MWh, peaking at £48.3/MWh on 18 July, the highest price since March 2015. Summer 17 power rose 7.0% to £40.4/MWh. Day-ahead power also followed its gas counterpart, up 2.6% to £38.2/MWh, the highest average in nine months
Oil prices reach three-month low, coal prices at 16-month high
Brent crude oil prices lost 5.3% to average $47.2/bl in July. Prices have fallen from their near eight-month high of $52.2/bl in early June. This was caused by concerns of oversupply in the market and global uncertainty.
Prices were at their lowest on 27 July, at $44.3/bl. They were pushed down as US producers increased the number of active rigs to the highest since April, Canadian supplies rose and Asia weakened economically.
API 2 coal rose 9.1% to average $58.8/t. On 18 July prices reached a 16-month high of $60.5/t. Recent gains can be largely attributed to reduced Chinese production.
EU ETS carbon dropped 17.4% to average €4.7/t. According to Thomson Reuters, carbon prices have fallen almost 20% since the UK voted to leave the EU.
The month ahead: Further rebound expected
Commodity prices have rebounded from lows earlier this year and this trend is expected to continue during August.