Power Annuals spike then slump
Tuesday 18th June 2019
Gas and power markets have fluctuated in the first half of June, first pushed higher by sustained (relatively) cold weather and then by the threat of increasing crude oil. Markets then turned on bearish fundamentals.
There were signs that oil would recover from the May slump, with OPEC+ expected to extend production cuts beyond June. There was also a spike when the two tankers were attacked in the Persian Gulf last week with the implied threat to global supply. However, there were still negative influences, particularly more talk of trade wars and the US stock build. As such, the Brent index is now back around the $60 level, near a 5-month low.
Short-term gas prices have edged up in the past fortnight as the cold weather means there has been unseasonal domestic heating demand. There have also been reduced flows from Norway and low nuclear output. This has had some influence on gas and power Annuals, so April ’20 and October ’20 have both gone lower than October ’19.