Power contracts driven to new lows
Business Energy Market Brief - Dec15
Seasonal power and business gas contracts declined to record lows in November, before making small recoveries later in the month. Lower oil prices and a comfortable supply outlook continued to pull gas contracts down, while falling coal and gas prices remained the principal driver of longer-term power contracts, which broadly continued their downward trend.
Annual April 16 gas fell 9.0% to average 36.9p/th, the largest monthly fall since January 2015, as lower oil prices and a strong supply outlook weighed on the contract. Rising LNG supplies are expected to continue in the medium and long-term, with imports up 35.9% in November compared to the same month last year.
However, the contract lifted to 37.4p/th at the month’s end as a Dutch court ordered further production cuts at Europe’s largest gas field, Groningen, reducing European supplies. Annual April 16 power followed gas and coal prices down, slipping 6.3% to average £39.1/MWh, reaching a contract low of £38.3/MWh on 12 November.