Markets were slightly calmer last week but oil continues to increase in price. In league with Russia, OPEC continued recent talk about supply reductions and demand gains with a review this month of their current production cuts.
Political problems in both Nigeria and Venezuela also caused concern about output from those countries. An unsurprising jump in interest rates lead to Sterling increasing in value, pushing prices up in the UK up.
This effect was compounded by European coal prices continuing their upward trajectory. Brent closed the week up 2.7% at $62.07 a barrel.
UK energy prices
For many, jumping clocks and colder weather signalled the start of winter proper. The cold front brought the highest demand so for gas so far this year – but the system coped well despite low wind output and higher power station demand.
Warm temperatures later in the week and two LNG deliveries pushed prices back slightly on a well-supplied gas system and more renewables output.
Rising oil and coal saw short-term price rises. After record-breaking wind output over the weekend, electricity prices held steady with good output, but France’s strained nuclear situation has kept potentially crucial power stations offline.
2018 contracts saw slight increases but longer-dated contracts all fell slightly on the week.
Gas prices for Q1 next year (January to March 2018) reversed last week’s fall as concern over winter margins returned. Prices for December gas and electricity both increased slightly.
Markets continue to see volatility with premiums still held for this winter with uncertainty over gas supplies and the French nuclear power output.
Clients should continue to monitor markets closely to look for price patterns as the winter weather outlook firms and prepare to contract in any dips.