Small Business Market Update Tuesday 9 October 2018
What has happened to Gas prices this week?
Small Business Market Update Tuesday 9 October 2018. UK Gas prices have reduced in value over the previous two weeks with all contracts across the curve weakening. Bearish fundamentals in Winter-2018 outweighed gains in Oil and Coal markets.
Oil prices climbed to $86.62 per barrel on 3rd October as supply fears increased in the market as the looming US sanctions come closer. Iranian exports have fallen over the last week. Iranian exports fell in the first week of October as buyers look elsewhere before 4th November.
Coal prices climbed above $100 per tonne over the last week but these gains had little impact on the gas market. Carbon emission prices remain strong, continuing to hold Coal up. Over the recent days, higher wind generation and stronger renewable energy sources in Europe have helped to reduce prices further.
On 1st October, long-term gas supply contracts through the IUK expired meaning that there was no demand for gas. Flows dropped to 0mcm daily through the pipe, leaving no option but to purchase on the prompt, Within Day and Day Ahead gas. This strengthened the prices at the front of the curve.
Temperature in the UK has increased above seasonal normal, reducing gas demand for the week. Temperatures which are set to climb to 5°C above seasonal expectations for this week, has helped to reduce the gas burn at the front end of the market.
There was a boost to the UK supply on Monday with an LNG cargo arriving on 8th October, followed shortly by another vessel set to dock on the 15th October. This has reduced gas prices as supply picture shows signs of some improvement as we head into winter.
What specifically affected prices in the past week?
Bullish factors (upward pressure)
- Oil Prices Up
- Coal Prices strengthen
- Carbon Emissions remain strong
- IUK Long Term Contract Expiry
Bearish factors (downward pressure)
- Warmer Weather
- Lower Gas Demand
- LNG Cargoes