Annuals collapse whilst short-term recovers
Tuesday 7th May 2019
We have seen a sharp reversal in gas and particularly power markets over the last fortnight. A lot of the spike in prices from the beginning of April has been wiped out. The key drivers for this have been a correction in coal, carbon and oil prices. Brent crude hit a 6-month high mid-April, but has now eased back as Russia increases production and President Trump exerts more pressure on OPEC to up production – there are still concerns over Iran and Venezuela, but the general oil outlook looks more bearish than in recent months.
Whilst Annuals have eased, short-term markets have shown more upward momentum. This has been down to cooler forecasts and less windy weather, meaning that gas consumption is up for heating demand and gas-fired power generation. However, the short-term increases have come off 22-month lows due to the main European interconnector being closed for maintenance, meaning gas was effectively ‘trapped’ in the UK creating downward price pressure.