Small Business Energy Market Update Tuesday 29 Jan 19

Small Business Energy Market Update Tuesday 29 Jan 19


What has happened to Gas prices this week?


UK Gas prices have weakened over the course of the last week despite increased demand and colder weather in the UK.


Colder weather delivered into the UK for the previous week with most parts of the country holding below seasonal norms, with flutters of snow and frost. Demand lifted and remained above seasonal normal demand not falling below since 9th January. Demand lifted on 23rd January to the highest since the Beast from the East but the UK system was only short on this day.


The cold weather period lifted demand, with low wind generation, however the strong flows from Norway and through LNG kept the system comfortable. During the cold weather period, long-range weather forecasts revised temperatures upwards predicting a milder end to January and February, which actually saw prices shed value.


The February 2019 contract lost 5p/therm over the course of Thursday 24th and Friday 25th January as cold weather risk was taken out of the market. The near curve helped to pull down the far curve making all contracts shed premium.


Brexit remained at the forefront of the market throughout last week as the Parliamentarian debate on the Brexit deal continued. Despite the deal, being voted against the GBP has strengthened to highs not seen since April 2018 helping to reduce the back of the curve.


Oil prices increased on the back of the expected resolution between the US and China on their ongoing trade war, forecasting a lift in demand. The far curve was pulled down by cheaper EUA’s and Coal prices with EUA’s losing €1.50 over the course of the week on most futures contracts. A cheaper Coal and EUA price reduces gas demand as it becomes more profitable to run Coal fired units.


Small Business Energy Market Update Tuesday 29 Jan 19 – Outlook


What specifically affected prices in the past week?


Bullish factors (upward pressure)


  • Oil Prices Up
  • European Gas Maintenance
  • Short System for previous week


Bearish factors (downward pressure)


  • Warmer Weather
  • Cheaper Coal & Carbon EUAs
  • Stronger GBP
  • Healthy LNG supply
  • Higher Renewable Generation

Small Business Energy Market Update Tuesday 29 Jan 19 brought to you by British Utilities

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