Gas and Power Prices Fall Despite Rising Oil
Long-term gas and power prices were largely flat during July as rising oil prices were offset by low demand. But during August annual power and gas prices started to fall as concerns about winter gas supplies faded and demand continued to fall as a result of the warmer weather.
Annual gas prices dipped as a result of low summer demand and easing concerns about gas supply. Annual October 13 gas fell 1.2% to a monthly average of 67.6p/th. But the contract is still 2% higher than the average for the corresponding contract last August.
Falling gas prices and the reduction in coal prices resulted in the annual October 13 power contract falling 0.8% to a monthly average of £51.7/MWh. But this is 2% lower than the same time last year.
Month-ahead Brent crude oil increased by 2.7% to an average of $110.0/bl in August, following concerns about tensions in the Middle East affecting oil supplies. Average coal prices dropped 3.1% to $83.3/t in August, as the market remains oversupplied. Coal prices are now approaching three-year lows.
Catalyst Business Energy Market Brief September 2013