Energy Market Brief – September 2019Winter 19 gas hits two-year low, power follows
Day-ahead gas prices fell 5.6% to average 28.3p/th in August. The contract dropped to 26.0p/th on 8 August, the lowest since June. Prices have been pressured by lower demand as temperatures were above seasonal normal levels throughout most of the month. September 19 gas also dropped, down 2.3% to average 31.3p/th, as the scheduled arrival of two LNG tankers early in September and high (at 97% full) gas storage levels offset concerns of a tighter market during planned maintenance in Norway. Seasonal gas contracts reversed the previous month’s gains, falling 2.3% on average. Winter 19 gas was 5.5% lower, averaging 48.7p/th, hitting a two-year low of 45.9p/th on 28 August.
Day-ahead power dropped 5.3% to average £39.6/MWh in August. The contract fell to £35.6/MWh on 16 August, the lowest since 31 May as wind output overtook CCGT output in the generation mix. September 19 power fell 2.1% to average £42.5/MWh, dropping as low as £39.9/MWh on 27 August. All seasonal power contracts also moved lower, down 2.7% on average, with winter 19 power declining 5.0% to £54.1/MWh. The winter 19 power contract hit a 15-month low of £51.5/MWh on 27 August.
Commodities fall on concerns of weaker economic growth
EU ETS carbon prices fell 3.1% to average €27.1/t in August, but did fall to a monthly low of €24.8/t – the lowest since 20 June 2019. Carbon prices have historically risen in August, as auction volumes are halved due to reduced summer trading. Concerns of a no-deal Brexit have been the primary driver for downwards movements in the last month, and with the return of normal auction volumes in September, prices are not expected to return towards recent 13-year high levels.