Business Energy Market Brief - Jul17
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Energy Market ReportsBusiness Energy Market Brief - Jul17

Business Energy Market Brief - Jul17

Jamie Flanagan

by Jamie Flanagan 03 July 2017

Report Summary:

Seasonal power contracts and commodity prices rise

key-market-indicatorsEnergy Market Brief - Jul17

During June, most seasonal gas and power contracts moved higher. Near-term gas contracts experienced losses, whilst near-term power contracts saw mixed movements. API 2 coal and EU ETS carbon prices gained, whilst Brent crude oil prices lowered. In June, day-ahead gas extended losses, down 10.6% to 35.0p/th, the lowest monthly average in nine months. Seasonal gas prices increased by an average of 0.8%. In contrast, Winter 17 gas dropped 0.8% to 45.3p/th. Summer 18 gas moved 0.2% lower to 39.3p/th.

Day-ahead baseload power lost 3.4% to average £39.7/MWh. The month-ahead contract rose 2.3% to £39.9/MWh. Most seasonal baseload power contracts moved higher and on average increased by 1.8%. Winter 17 power climbed 1.7% to £46.2/MWh. Summer 18 power gained 2.1% to £39.5/MWh.

Oil prices drop amid concerns over increasing output and diplomatic tensions

Brent crude oil prices dropped 7.3% to average $47.8/bl in June.

Prices started the month above $50.0/bl, but decreased steadily, amid concerns over increasing US crude inventories, rising output from Libya, Nigeria and the US and rising tensions in the Middle East after Saudi Arabia and other Arab states cut diplomatic ties with Qatar. On 22 June prices fell to $45.2/bl, the lowest price since 14 November 2016. Reports of high OPEC compliance with production cuts, tropical storm Cindy disrupting US oil operations in the Gulf of Mexico and a weakening US dollar provided some support to prices towards the end of the month.