Spring-like weather creates more downward pressure
Tuesday 5th March 2019
Prices have continued to decline during the second half of February. This has predominantly been driven by the very mild weather, with record temperatures some 10 degrees above seasonal norms. As such, gas heating demand is down and storage levels are looking much more healthy than 2018. There has been a slight upturn at the end of last week as forecasts have finally turned colder, but bullishness has been countered by the arrival of Storm Freya – increased wind power means less gas generation demand.
Further out, price reductions have been less steep, with firmer coal, oil and carbon exerting more influence than the short-term market.
Brexit (as always) has an influence. The latest indicators of a soft Brexit have sent the pound as high as €1.17. The more Sterling moves towards 2016 levels, so the cheaper gas and power imports become, ultimately giving cheaper costs in the UK.