Business Energy Market Brief - Oct15
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Energy Market ReportsBusiness Energy Market Brief - Oct15

Business Energy Market Brief - Oct15

Chris Hurcombe

by Chris Hurcombe 01 October 2015

Report Summary:

Gas and power contracts ease lower

Gas and power contracts ease lower


After a minor price surge at the beginning of the month, seasonal commercial gas and power contracts declined steadily throughout September, some reaching record lows. A boost in oil prices provided initial support for gas contracts, however, an increasingly comfortable supply outlook weighed on contracts for the remainder of the month. Power contracts largely followed trends in gas, but were additionally weighed on by tumbling coal prices.

Annual October 15 gas fell 1.0% to average 41.8p/th, ending the month at 40.6p/th. Anticipated strong LNG supplies in both the near-term and long-term have pulled seasonal contracts lower, with five LNG cargoes expected to reach the UK in late September and early October. Annual October 15 power followed down, slipping 0.4% to average £42.2/MWh, ending the month at £41.5/MWh. Unless there are significant changes in the currently subdued commodity environment, seasonal power prices are expected to remain low.

In contrast, spot power and gas contracts increased in September. Rising gas prices were owed to higher-than-normal demand, as forecast temperatures were 15.5% below the seasonal norm. Day-ahead gas lifted 2.6% to average 41.1p/th. The day-ahead power contract followed its gas counterpart, rising 3.7% to average £42.1/MWh, ending the month at £41.1/MWh. Outages at several coal and nuclear plants also supported spot power prices.