The last fortnight of 2019 saw a downturn for gas and power Annuals, continuing the trend that started mid-December. The key driver here was the gas transit deal between Russia and Ukraine. Whilst this looked touch and go earlier in December, the 5-year deal agreed represents real energy security for Western Europe, and thus (in theory) less price volatility. Prices were also pushed lower by mild weather forecasts, with downward pressure on short-term feeding into Annuals as gas demand dropped.

However, at the time of writing, prices are seeing a reverse. This has been prompted by the US air strike in Iraq, and the death of the influential Iranian General. The incident has resulted in a sharp rise in crude oil, with the Brent index nearing $70. An escalation of tension in the Middle East prompts fears about oil and there is thus a knock-on effect for the wider energy complex (there was a similar upturn with the Saudi oil field attacks in the autumn). Live prices suggest Annuals are back to where they were mid-December, and there is certainly more bullishness now.

Back