Energy Market Risk Analysis| Early August 2016

Downwards drift helped by oil drop

UK power and gas forward prices weakened over the second half of July, as concerns over the extended closure of Rough, the UK’s largest gas storage site, faded and as oil markets slid to a three-month low. However short-term prices have been buoyant, supported by a tighter supply picture.

Forwards soften; short-term surges

While longer-term prices have edged lower, as worries over winter gas storage volumes have eased and as the oil market has shed value, short-term prices have surged amid a raft of supply issues.

Day-ahead traded as high as 37 p/th – up from 32.5 p/th in mid-July, and its highest level in seven-and-a-half months – as a series of production problems, largely in the Norwegian offshore, constrained supply.

Energy price shift between 18 July 2016 and 31 July 2016

Elec: -0.95%

Gas: -2.18%

Coal: +2.86%

Oil: -10.63%

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