Energy Market Report - Feb19
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Energy Market ReportsEnergy Market Report - Feb19

Energy Market Report - Feb19

Ian Mckenna

by Ian Mckenna 05 February 2019

Report Summary:

Wholesale prices drop to six-month lows

key-market-indicatorsEnergy Market Brief - February 2019

All wholesale power and gas contracts fell in January as comfortable gas supplies prevented below seasonal normal temperatures from raising prices.
Day-ahead power reversed the previous month’s gains, dropping 2.6% to average £62.3/MWh in January as it followed its gas counterpart lower. Despite this, day-ahead power rose to a 10-month high of £73.0/MWh on 23 January as wind generation was forecast below 1GW the following day. All seasonal power prices decreased in January, down 2.3% on average. Summer 19 power fell 4.4% to average £55.1/MWh, ending the month at £52.2/MWh, a five-month low.

Day-ahead gas fell 9.1% to average 58.5p/th in January, ending the month at a six-month low of 53.0p/th. Gas prices were pressured by below seasonal normal demand early in the month, and despite temperatures in the second half of January dropping to their coldest since March 2018, the gas system remained well supplied. All seasonal gas contracts decreased in January, dropping 4.2% on average, despite an increase in Brent crude oil prices. Summer 19 gas declined 7.4% to average 52.6p/th, ending the month at 48.9p/th, a six-month low. 

Brent crude oil recovers as global supply tightens

Brent crude oil prices rose for the first time in three months, up 2.4% to average $60.1/bl in January. 2019 represented the start of OPEC’s latest round of production cuts, which aim to lower the group’s oil output by 1.2mn bpd until June. Oil prices were supported by news that the US government would impose sanctions against Venezuela’s PDVSA oil company and reports that Saudi Arabia would be cutting production more than required by OPEC’s latest agreement. However, several global banks and analysts have lowered their 2019 Brent crude oil price forecasts as strong growth in US oil supplies and uncertainties over global oil demand are expected to pressure prices this year.