Hurricane Laura pushes oil and US gas prices up
Friday 4th September 2020
The last two weeks of August saw a real surge in energy prices, particularly on short-term markets. This was caused by various factors, but particularly by a combination of low renewable energy output (both wind and solar in the lull following Storm Francis) and tightness of gas supplies in the normal North Sea maintenance season. Day-ahead power spiked to a 19-month high at one point, although this has dropped back with the arrival of the latest Atlantic weather pattern. The short-term effects were also reflected in Seasons, with Winter ’20 hit – this period has also been affected by an invigorated carbon market.
Gas increased in line with oil, with output affected by Hurricane Laura, the expected ‘hurricane season’ effects being quite pronounced in the Gulf of Mexico this year. There is also some nervousness surrounding Russian gas flows to Western Europe for the coming winter, with international tensions heightened by the poisoning of Alexei Navalny.
Meanwhile, there are nuclear issues both in France and the UK that have pushed prices higher. The French nuclear maintenance programme has been hit with delays where additional remedial work is required. EDF also announced that Hunterston B nuclear power station in the west of Scotland will be decommissioned sooner than expected from January 2022, creating an unanticipated generation gap.