Power and gas prices rise across the board
Business Energy Market Brief - Jun16
Sharp gains in commodity markets continued to support power and gas prices in May, with seasonal power contracts averaging their highest levels since December last year.
Seasonal gas prices gained 6.3% on average, as higher oil prices fed through to the GB gas market. Winter 16 gas increased by 6.9% to average 36.1p/th, while summer 17 gas experienced the largest increase, up 8.5% to 33.4p/th. Despite the recent gains, growth may be limited due to the strong gas supply outlook for Europe. In the shorter term, day-ahead gas moved 3.6% higher to average 30.3p/th. It has been reported that gas-for-power demand in May was at a four-year high. Gas-fired generation has dominated the UK energy mix in recent months, increasing demand for gas and consequently supporting prices.
Seasonal power contracts also climbed in May, following their gas counterparts higher. Winter 16 power lifted 5.4% to average a six-month high of £40.2/MWh, while summer 17 power rose 7.0% to £34.6/MWh. Day-ahead power also followed its gas counterpart, rising 1.0% to average £34.2/MWh.