Small Business Energy Market Update Tues 13 Aug 19

Small Business Energy Market Update Tues 13 Aug 19


What has happened to Gas prices this week?


Small Business Energy Market Update Tues 13 Aug 19: Prices have generally eased off over the course of the week, with all contract tenures reported on decreasing in value in comparison to the last issue sent on 5th August. There has been a brief spell where prices increased over a number of days, with some short volatility, however all in all prices are down.


The UK temperatures delivered below seasonal average for the previous working week, which helped to suppress gas demand. In addition to cooler temperatures, the UK faced strengthening renewable generation amid blustery and stormy conditions. The CCGT demand significantly reduced falling to total of 30mcm. With reduced temperatures and higher wind levels the gas burn for power generation halved in comparison to the week before.


The UK gas system was comfortable for the last working week, aided by higher renewables as discussed above. On 4th August, Norwegian maintenance on infrastructure calmed leading to strong flows into the UK. The prompt prices, influencing a 12-month tenure saw prices fall as the DA and front month contracts lost value.


Oil prices have consistently fallen over the past week as a weaker demand outlook amid poor economic data and continuation of the US/ China trade war pressured the market. The Chinese yuan saw a sharp fall against the US dollar on 5th August, leading to Donald Trump branding China as a currency manipulator. Following a recent escalation in the trade war between the countries, Oil prices have slipped below $60 as forecast demand weakens as China need less of the commodity due to a slowing economy.


Carbon prices had climbed to close just below €30/t leading to some support on the far curve over recent weeks. Since 5th August and the last SME report to be sent Carbon prices have fallen close to day on day, dropping from €29.50 to €26.95 currently. Weak auction results has slowed the demand for compliance buying and helped to reduce the commodity price. Coal prices also shed some value, which helped to further reduce demand on gas as generators were able to burn Coal more cheaply helping to further pressure the gas curve.


The GBP saw some sharp weakness proving some support to the curve, as GDP statistics released last Friday were worse than expected. Throughout the second quarter of 2019, the UK economy shrank 0.2%, which added to the Brexit uncertainty. This is the first time since 2012 that the UK economy contracted, moving the UK one-step away from recession.


The maintenance period for Nyhamna, which was taken offline due to a compressor failure in July, expected to return on 19th August, has been extended until late September. Work on gas fields delivering into SEGAL remain offline until 21st August meaning that supply could be restricted for the coming weeks.


Upcoming temperatures are suggesting that the UK could sit below average for the remainder of August, likely to be hit by a number of periods of higher and stronger wind generation, which could help counteract the restricted flows from the continent.


Small Business Energy Market Update Tues 13 Aug 19 – Outlook


What specifically affected prices in the past week?


Bullish factors (upward pressure)


  • European Gas Maintenance Ongoing
  • GBP Weakness


Bearish factors (downward pressure)


  • Warmer Weather
  • US/ China trade war
  • Lower Gas Demand
  • Higher Renewable Generation

Small Business Energy Market Update Tues 13 Aug 19 brought to you by British Utilities

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