Power and gas contracts mixed following Brexit
Business Energy Market Brief - Jul16
Gains in commodity markets created a general bullish trend in the GB energy market in June, with most gas and power contracts experiencing gains. In addition, the UK’s vote to leave the EU impacted commodity and power markets towards the month’s end.
Seasonal gas prices gained 0.2% on average, as higher oil prices fed through to the GB gas market. Winter 16 gas increased by 12.2% to average 40.6p/th, while summer 17 gas was up 12.0% to 37.5p/th. An outage at Rough gas storage facility has prevented injections until 3 August, which could impact winter supplies.
Day-ahead gas moved 13.2% higher to average 34.3p/th. Following the referendum vote, spot gas contracts gained due to increased trading and a weaker pound, making UK gas less expensive to investors, and leading to a rise in demand.
Seasonal power contracts also climbed in June, following their gas counterparts higher. Winter 16 power lifted 9.2% to a seven-month high of £43.8/MWh. Summer 17 power rose 9.1% to £37.7/MWh. Day-ahead power also followed its gas counterpart, up 8.8% to £37.3/MWh, the highest average in seven months.