Energy Market Risk Analysis| Early June 2016

Prices slip and then rebound

It has been another volatile fortnight for UK power Annual prices ─ which spent most of the second half of May shunting lower again before rebounding strongly at the end of the month. The bounce came largely on the back of firmer gas market sentiment, driven in part by significant tightness in physical gas supplies just as a temperature drop boosted demand, but was also driven by confirmation that another coal-fired station is to shut this month, strident coal market gains and the oil market edging up to bubble just under $50/barrel.

Norway outages drive market higher

While there was a general drift-down in prices as the second half of May got underway – in the face of good physical supply and buckling oil prices – over the last week all UK gas periods have firmed sharply; at the time of writing most had passed the peak values seen during the late April price spike and were being discussed at their highest levels since early December.

Energy price shift between 17 May 2016 and 02 June 2016

Elec: +1.3%

Gas: +2.83%

Coal: +5.8%

Oil: +0.1%

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