Bullish oil sends all energy markets higher
Wednesday 5th September 2018
Wholesale gas and power prices were affected by a series of bullish drivers in the second half of August, sending some power seasons to 10-year highs.
Oil has been a major influence, with the main Brent and WTI indices coming off a three month decline and Brent again up around $80. US oil inventories are down, Iranian production is in decline ahead of the US sanctions and it is of course hurricane season in the Gulf of Mexico, impacting refining output.
European carbon trading is also having a big impact on cost – the cost has doubled since March. There has been the physical impact here of gas and coal burn during the European heatwave, but there is also speculative buying ahead of expected market changes next year.
Various other factors are also hitting the cost of gas and power – nuclear outages across several European countries; gas storage replenishment for the coming winter post-heatwave (European storage at the lowest level for eight years); unexpected North Sea outages hitting oil and gas.