Business Energy Market Brief - Nov15
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Energy Market ReportsBusiness Energy Market Brief - Nov15

Business Energy Market Brief - Nov15

Kiran Jutti

by Kiran Jutti 01 November 2015

Report Summary:

Healthy supplies drag gas and power contracts lower

Healthy supplies drag gas and power contracts lower

key-market-indicators

Seasonal commercial gas and power contracts increased in early October, but later returned to their downward trends to reach record lows. Higher oil prices gave a boost to longer-term gas contracts at the beginning of the month. But an increasingly comfortable supply outlook later reversed the contract’s upward movements. Seasonal power contracts followed gas and coal prices lower, with commodities remaining the dominant driver.

Annual April 16 gas fell 4.5% to average 40.6p/th, hitting a fresh low of 39.1p/th on 29 October. Rising LNG exports from Australia, the commissioning of the first wave of LNG units in the US and the restart of Japanese nuclear reactors pulled long-term gas prices down. Annual April 16 power followed gas and coal prices lower, slipping 2.4% to average £41.8/MWh, reaching a contract low of £40.7/MWh on 28 October. While commodity prices remain subdued, longer-term power contracts are unlikely to experience any significant gains.

Despite moving into the winter months, spot gas and power contracts also decreased. Day-ahead gas dropped 3.4% to average 39.7p/th. It hit a nine-week low of 38.4p/th on 29 October, as strong Qatari LNG deliveries and temperatures above the seasonal norm dragged prices down. The day-ahead power contract followed its gas counterpart, falling 3.8% to average £40.5/MWh, with prices being 10% lower than the same month last year. .