Last week brought more price falls to the energy market, although these pulled up short on Friday with news of an incoming cold snap.
Many different price signals fought to be heard throughout the week. Various Brexit announcements pulled markets in different ways, warm weather eased demand, the pound fluctuated and carbon prices fell sharply.
After a fall from recent highs, also looked for some direction. The implication of Saudi Arabia in the murder journalist Jamal Khashoggi briefly threatened the world’s oil supply in a dramatic fashion, but tensions cooled by the end of the week amid higher US production and storage.
Brent closed the week down 0.8% at $79.78 a barrel.
In the UK, the gas system coped well. Norwegian gas flows were high and more LNG was used up to create space for several new tankers.
Wind output was down slightly, but lower than average electricity demand reduced the amount of gas going to power stations.
On Friday, however, news of two-week cold snap saw short-and-medium-term contract prices shoot up.
Most contracts saw small falls over the course of the week. This would have been larger but for the sharp rebound on Friday.
The first cold snap of the autumn put pressure on prices as long-standing concerns about the system’s ability to cope with a harsh winter have still not been addressed.
With European storage volumes back near seasonal norms, weather forecasts will be one of the key price drivers over the next few months – along with Brexit and associated currency fluctuations.
With prices back down at August levels and cold weather approaching, risk-averse clients may be tempted to commit to a new contract.