April Gas and Power price decline sees reverse in early May

Friday 5th May 2017

As we enter May, so gas and power price declines in April have reversed. This is predominantly driven by a lack of physical gas supply, following sustained Norwegian outages. Gas demand was up due to colder weather and generation requirement caused by low wind output. We have also seen the first full day ever in the UK with zero coal-fired electricity generation, a vision of things to come.

The global picture is more influenced by oil – whilst OPEC is expected to extend the production cut at the end of May, the Brent index is once again nearing $50, with strong US figures and a glut of Libyan volume. Oil has suppressed upward momentum in gas and thus power. We await the OPEC decision with anticipation. However, there is a general expectation that the cut will be extended, and this has thus been factored into the rates we are seeing now. As such, there should not be a spike as followed the first agreement.