News

The market uncertainty that has characterised global energy markets in recent weeks continued last week with prices in a near-constant state of flux. Political events weighed heavily on prices. Ongoing instability in Iraq – particularly the military re-taking Kirkup oil fields – kept markets worried. Donald Trump’s decision not to recertify America’s nuclear deal with Iran compounded this uncertainty. Oil prices rose through the week before faltering late on. More falls in US storage levels and OPEC signalling that output will be kept down kept the market on edge. Coal also had a rollercoaster week with prices rising $3 since the week prior. Brent closed the week up 1% at $57.75 a barrel.

UK outlook

In the UK, with Norwegian maintenance finally completed, supplies were near normal with the system long or balanced for much of the week and three LNG cargoes expected in the UK over the next week or so. But strong demand from power stations despite high wind held prices up. Warmer weather forecasts for the week ahead brought prices off the boil, but concern over gas demand owing to problems in the French nuclear industry remains. Electricity saw pressure from those continuing problems with French prices being volatile across the week, affecting UK pricing. Almost all contracts rose last week. Shorter-dated contracts moved within 1% while longer-dated contracts saw larger increases on coal and currency movements. Prices for winter saw small changes with electricity down and gas up for the first quarter of 2018. Markets continue to see the risk of volatile prices this winter with the heightened uncertainty over gas having a knock-on effect on electricity prices. Clients should monitor markets closely to look for price patterns as the winter weather outlook firms.