Energy Market Brief – December 2020Seasonal gas contracts fell in November. Prices were dampened by milder temperatures, which were higher than expected for this time of year. Additionally, reduced demand with the introduction of a four-week nationwide lockdown in England acted to drive prices lower.

Annual Gas Prices

annual gas prices - Dec20

Annual Power Prices

annual power prices - Dec20

Seasonal gas contracts fell in November. Prices were dampened by milder temperatures, which were higher than expected for this time of year. Additionally, reduced demand with the introduction of a four-week nationwide lockdown in England acted to drive prices lower.

Seasonal contracts from summer 21 to summer 23 fell 3.9% on average. Summer 21 fell 3.6% to average 33.25p/th, with the winter 21 contract down 3.1% to 41.68p/th.

Gas prices may find some support in the coming months with notably cold weather for the UK and Continental Europe on the Horizon. However, this could be offset by generally lower demand over the Christmas period with many businesses and industry closing down.

Most near-term and long-term power contracts experienced declines, with the exception of the day-ahead contract. The day-ahead contract in November benefitted from periods of notably low supply margins, causing significant spikes in power prices.

All seasonal power contracts up to and including summer 23 fell, following seasonal gas prices lower. Similar to gas prices, demand has wavered amid continued tiered restrictions nationwide, with this also suppressing the longer-term outlook. The summer 21 contract fell 1.4% to average £42.97/MWh.

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