After a fairly benign fortnight for markets through the second half of May, there was a dramatic downturn at the end of last week. This was predominantly driven by a collapse in oil markets - around $10 / 13% came off Brent in 10 days. The bearishness here, as well as for coal and later carbon (as ‘No Deal’ became more likely) eventually fed through to gas and thus power. The change in weather (warmer and windier) meant that gas demand fell and day-ahead gas dropped to a two-year low. Coal demand is down as fears of a US-China trade war grows, and the UK per se has seen no coal-fired generation for a full two weeks.

There were of course bullish drivers in the past fortnight, particularly sterling that lost value versus the dollar and euro. There was also upward pressure from a delay to the Hunterston B nuclear reactors coming back on line and more earthquake issues regarding the Groningen gas field in The Netherlands. It is interesting that Groningen is not the key driver it was just five years ago, as the abundance of physical gas from other sources and the growth of renewable generation make Europe’s once larges gas field much less significant in energy considerations.

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