Small Business Energy Market Update Tuesday 22 Jan 19.
What has happened to Gas prices this week?
UK Gas prices have shown fairly no change in comparison with last week’s price report, with prices generally in line to last Tuesday. Despite prices, remaining unchanged there has been some significant movement in the market.
Since last week, weather models had generally forecast a lengthy and deeper cold spell across Europe threatening to lift gas demand across the region. Between the 16th and 18th January gas prices soared upwards on fears of this especially considering the panic that was caused during the Beast from the East last March. This threat subsided over the weekend, with gas prices falling ~3p/therm (0.102p/KWh) on the February 2019 contract as temperatures are expected to remain at or just below seasonal norm.
Gas prices are impacted massively on weather forecasts in the winter as it outlines the predicted supply/demand picture in the network, often leading to views of increased gas demand. As warmer forecasts become more confidently aligned, gas prices fell, as the need for gas is likely to be lower.
The UK system has coped well with the winter period so far, taking into account this is the first full year in which Rough Storage (The UK’s largest storage facility) was unable to have gas injected into it. A very solid LNG supply and near capacity flows from Norway and through the BBL pipeline into the UK are helping to support the increase in demand due to colder temperatures.
The British Pound has seen some strength this week, making the far curve more expensive for traders backed by other currencies. This means there is less buying on the UK market, reducing the demand. Brexit uncertainty has helped lift the Pound as it becomes more likely a softer Brexit or even a delay to the UK leaving the EU becomes more feasible. On Tuesday morning, the UK also released data showing that employment in the country is at record highs.
Coal and Oil prices continue to remain strong, which is helping to offset further losses on the back of the market. Carbon EUA emissions are also priced strongly with prices lifting above €25.00 this week.
Small Business Energy Market Update Tuesday 22 Jan 19 – Outlook
What specifically affected prices in the past week?
Bullish factors (upward pressure)
- Oil Prices Up
- Coal Prices strengthen
- Carbon Prices Climb
- Colder Weather Forecasts
Bearish factors (downward pressure)
- Warmer Weather Forecasts & Delivery
- Strong LNG and supply
- Very strong gas flow into the UK
- Higher Renewable Generation
- Stronger GBP
Small Business Energy Market Update Tuesday 22 Jan 19 brought to you by British Utilities