2018 so far has not been a good year for the energy market and energy prices, as they have continued to soar. Most farms are expecting a 15-16% increase in cost this year because of the rises and changes. Looking forward to 2019 and whether prices will decrease, we very much doubt it. With Brexit and several new regulations being introduced, the suppliers will no doubt use this as a reason to increase their tariffs.
The UK has experienced a period of milder weather, weakening gas demand which has helped to reduce prompt gas prices. Coupled with this, the UK has experienced a stronger supply of LNG cargoes, Norwegian gas returned to near full capacity and the UK system has been long consistently helping to push front prices downwards.
The UK has experienced a strong renewable generation over the previous week, with wind levels up at 8GW on Friday 19th October and Monday 22nd. Wind levels were forecast to climb to 10GW today, with forecasts for gas demand as low as 30% of the total UK gas demand.
Carbon prices have eased and dropped below €19.00 for only the second time since mid-September. This has helped to reduce gas prices further out on the curve, pulling prices down on the future seasons.
Coal prices remain priced just under $100 per barrel which is one of the remaining fundamentals that is keeping prices strong.
GBP weakness which continues to remain at the forefront of the market as Brexit rumbles on has also kept some of the gains on the back of the UK curve. A weaker Pound encourages traders backed by euros to trade on the UK market as they get more gas for their currency.
Bullish Factors (upward pressure)
• Coal prices increased
• Weaker pound
Bearish Factors (downward pressure)
• Milder weather
• Lower gas demand
• High renewable generation
• Carbon and Brent prices ease
For more information on how you can make the most of the market, get in touch with the team today.