Power Market bullish trend intensifies then buckles on drop in oil
Tuesday 21st November 2017
November started with significant spikes across most power and gas indices. There were various bullish factors behind this – domestic gas demand rose on colder weather and there was also the effect of oil hitting a 29-month high on the back of political issues in Saudi Arabia. The Saudi influence is two-fold: first, there was the political purge which saw several high-ranking political figures arrested; secondly, there are military concerns regarding Iran and Yemen which boosted oil too. Power was driven higher by gas, but also by the ongoing outages in the French nuclear industry. Coal year-ahead was also buoyant, hitting its highest level since June 2013.
At the time of writing, there are hints that the bull run may have come to an end, but whether we shall have sustained bearish influence remains to be seen. EDF have confirmed that several of the French outages will be shorter than anticipated. Oil has dropped back on lower demand forecasts and increased US production. Finally, the weather forecast for Northern Europe has improved for the next fortnight with temperatures set to swing above average as we move into December.