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Energy Market Update 21/10/16

Last week brought some calm to the market, as traders seemed content to wait and see what happens over the next few weeks. Oil prices stagnated as cracks appeared in OPEC's intention to cut output and US drilling rig counts were seen, potentially adding extra supply. But more sharp falls in US inventories and a strengthening dollar further offset this pressure. Brent closed down just 0.3% at $51.78 a barrel. 25-10-16-111 In the UK, another week of a short gas system added some upward pressure despite warmer short term weather forecasts. Electricity prices were more volatile throughout the week as unexpected outages on a number of French nuclear generating stations generated concern about the winter outlook. With wind output also falling as we got closer to the weekend, November and December contracts saw large rises of over 10%. All shorter dated contracts gained on the week although again at lower levels compared to some recent weeks. Volatility continues with concerns about winter pricing increasing. This will continue as we go further into the winter and as details of the proposed cuts are revealed by OPEC. Although delivered gas prices in particular are still lower than they have been in some years, clients happy to take the risk may want to consider pausing to see market direction before fixing contracts. 25-10-16-222

Published by Utility Helpline on (modified )