Whilst both power and gas Annuals hit six-month lows in the last fortnight of March, there was a sharp upturn at month end, following the crude oil and coal indices. Oil has been affected by disruption in Libya, by lower US inventory figures and renewed momentum with the OPEC production cut. Coal prices increased (boosting European electricity prices) due to production delays in Australia as the widely reported cyclone struck.

Prices had been driven lower by an abundance of gas (with increased LNG deliveries throughout the month) and near record solar and wind production in the UK. However, as gas flows tightened on Norwegian outages so the curves moved up.

Among bullish market drivers is Brexit, with the continued weakness of Sterling (although this did conversely show an upturn on the signing of Article 50). There could however be increased bearish pressure from President Trump’s reversal of environmental controls, giving a firm commitment to US fossil fuel production. 

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