Energy Market Risk Analysis | Mid October 2014

Further falls on global energy slump

UK power and gas prices have shed further value over the last two weeks, under the influence of a continuing slump in global energy markets, which has seen oil prices hit a four-year low, coal markets hit a five-and-a-half year low and German electricity drop towards a nine-and-a-half year low, overriding any Ukraine-related fears.

But with a loss of 2% in price over the last fortnight, April ’15 Annual UK power has again witnessed a smaller drop than most other markets, as concerns over UK electricity supply margins continue to lend some support. April ’15 Annual has fallen back beneath £51/MWh, just 60 pence above the multi-year lows it reached in early July, while all Annuals beyond this have actually broken beneath long-term lows.

 

Annuals drop to record lows

It has been another bearish fortnight for UK gas prices, with Annuals generally dropping almost 3% in value, and all Annuals beyond April ’15 Annual sliding to their lowest ever levels (since they started being discussed as much as five years ago).

A tumble in global energy markets has been the main driver, while concerns over Ukraine have taken a back seat – amid hopes that talks next week will lead to an interim gas supply deal with Russia and as the conflict in the east of the country has largely slipped out of the headlines.

 

The previous market risk analysis for Early October


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Energy price shift between 05 October 2014 and 16 October 2014

Elec: -0.75%

Gas: -0.62%

Coal: -3.8%

Oil: -12.39%
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