Wholesale energy prices update 14/4/17
The energy market outlookMidweek oil prices lifted in response to a draw down in American storage levels. There was announcement from Centrica that there would be no injection into the Rough gas storage facility over the next 12 months, which led to a reduction in the immediate summer prices. Its anticipated that there will be plenty available in the short term, but winter will see a depleted gas supply, increasing the prices for winter 17. Other fundamentals in the electricity market remained stable and therefore electricity prices followed gas and coal. The market gains of the previous week were lost with most contracts losing more than 2% as the recent risk dissipated. There will be continued volatility in the markets as traders wait to see how the new US administration’s foreign policy evolves and what its potential effect on energy fundamentals could be. Those clients looking to avoid risk should consider their contracts now with prices still lulling. Those less risk averse should monitor the markets closely and prepare for possible fluctuations.
OutlookWith the rebound in oil prices, May’s OPEC meeting is looking like it will be vital to forward pricing, with agreement on whether or not production cuts will continue beyond the initial six months. Those who are risk-averse should consider their contracts now whilst prices are still low. The current market volatility looks likely to continue so those clients comfortable with the inherent trading risk should monitor the markets carefully in preparation for any price fluctuation.
Published by Utility Helpline on (modified )
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