General uplift in global energy markets pushes up Winter ‘18
Thursday 3rd May 2018
Prices across power and gas indices shot up in the last fortnight, following global energy markets. The strength of oil and coal in particular has given a bullish slant to Annuals, whist an unexpected cold snap hit the short term market. The US Dollar has also strengthened versus Sterling which has put further pressure on UK prices (oil and coal being priced in dollars).
The continued strength of oil – now at levels last seen in 2014 – seems to be the main driver on the direction of gas and power. Prices are high as the OPEC production cut is successfully national inventories of crude. They are also sustained by the uncertainty over whether the Iran nuclear agreement will be ratified by the US – if it is not, this could take a significant amount of oil out of the market and thus pressurise prices even more.
There have been some bearish indicators as we enter May, with prices dropping slightly – this is perhaps the start of a sustained correction that may gain momentum, especially if the forecast warm weather continues.