Power prices slump on declining oil and financial downturn
Friday 4th January 2019
The past fortnight has seen a general decline in energy markets. The big driver was oil, where the Brent index dramatically shed value on Christmas Eve, dipping below $50 within day. Whilst the index has somewhat recovered, it is indicative of a perceived slowing of the global economy and thus overall energy demand. Short-term markets have dropped on a mild and windy Christmas period. However, there are colder forecasts across Europe for the second part of January, so this could reverse current sentiment.
There is still significant backwardation in gas Annuals, where future prices are at a discount to the current year – for example, October ’24 is now 18% lower than October ’19. This indicates that current gas is perhaps overpriced, but also that lower demand is anticipated.