News

UK prices - Forward annual gas (NBP) and electricity (base load) pricing Sharp increases last week defied initial expectations after major oil producing countries failed to agree curbs on production when they met in Doha. Prices did fall on Monday, but as the oil worker’s strike in Kuwait, along with production outages in Venezuela and Nigeria, excess global oil production quickly vanished.

“Purchasers that are still holding out to find a new price floor may wish to review their buying decisions.”

The International Energy Agency’s announcement that non-OPEC production would see record falls this year, plus a weakening dollar reinforced the upward pressure on prices. Brent oil closed the week up 4.7% to $45.11 a barrel. 

UK wholesale energy market prices

In the UK, the price for gas and electricity followed oil with sharp upward movements. With a short system for most of the week and forward temperatures predicting lower than seasonal norms for some weeks, gas responded accordingly. Electricity also tracked upward, helped by further unexpected outages of generation plants and low wind generation. The lack of agreement in Doha could still have a long term negative impact, but other events have softened the blow. Wholesale prices are still at 10 year lows, and delivered prices remain attractive to buyers. But with gas up 14% since mid-January and electricity up 8% in the same period, purchasers that are still holding out to find a new price floor may wish to review their buying decisions. Wholesale prices are still at some of the lowest levels seen in 10 years and delivered prices are still very attractive. However, gas has now risen by 14% and electricity 8% since their mid Jan lows so clients waiting for the markets to drop further may look to review that decision.