Energy Market Risk Analysis| Mid May 2016

Coal power output drops to zero

UK power and gas prices slipped back as May started and the late-April price spike unravelled further – however since then the market has rallied again, shorter-term prices bolstered by output from coal-fired stations dropping sharply, and periodically hitting zero for the first time (since 1882), and longer term prices shored up by the oil market reaching  six-month highs as wildfires disrupted oil sands production in Canada. Forecasts of more unseasonably low temperatures across Europe also lent some price support.

New rally takes hold

Having witnessed a further dip in value at the start of May, UK gas prices have all been on an upwards trajectory since, Annual values boosted by another rally in oil prices and short-term levels by outages, colder weather and increased buying from generators.

October ’16 Annual has gained 2 p/th, or 6% in value, as a result ─ to reach 35.5 p/th, while April ’17 Annual is back up around 36.6 p/th. All Annuals are now little more than a penny away from the peaks they reached during the late-April price spike.

Energy price shift between 03 May 2016 and 17 May 2016

Elec: +3.69%

Gas: +5.07%

Coal: +1.59%

Oil: +2.97%

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