The jumped around considerably over the festive period. Oil volatility was high but concrete differences in other energy prices were rare. The Forties oil pipeline closed for repairs over Christmas but is now back to full operation.
Oil increased throughout the season as riots in Iran, US storage dumps and small reductions in rig drilling for shale oil pushed prices up. Cold weather in Europe and the US also placed upward pressure on prices.
Brent closed the first week of 2018 up 4.8% compared with pre-Christmas levels, at $67.72 a barrel.
In the UK, the Christmas holidays brought a demand drop below the seasonal norm. The gas system coped well when the Forties system cam back online – trading long on most trading days.
Wind output was also high as the latest storm – Storm Eleanor – brought strong gusts to large parts of the UK. This temporarily negated gas power generation, but wind output dropped as the storm passed over the UK’s wind generation hot spots.
Warmer forecasts for early January helped ease prompt prices. With good wind output, electricity prices on short-term contracts also came off despite two nuclear stations being offline.
Almost all contracts saw gains on their pre-Christmas prices. Although losses during the first week of January lessened the impact of the increase.
Prompt prices have come off as immediate risks are removed but longer-term contracts are seeing the effect of rising oil prices. With no forecast cold periods in the short-term, prices have regained some stability but the price curve for the remainder of the winter is yet to be seen.
Clients should continue watching the markets closely or speak to a member of the energy team for purchasing advice.