Global financial and energy markets are going through extraordinary changes, predominantly through the effects of the coronavirus pandemic. You will have seen the collapse in oil and share prices over the last few days. However, electricity and gas have been largely unaffected by these monumental shifts and have more or less stayed steady over the last fortnight. A lot of this is down to the fact that power and gas Annuals were already at multi-year lows. Whilst gas (and hence electricity) has traditionally mirrored the oil market, the current crash – prompted by the Saudi / Russia fallout and perpetuated by coronavirus – does not necessarily affect gas. Oil is down because more is being pumped and less is being used for transportation; transportation changes do not specifically affect gas and power.

The expected global recession indicated by falling stock markets probably means that gas and power prices will stay supressed in the medium term. However, there is some indication that once we turn the corner on the coronavirus, so financial stimulation packages will kick-in, and demand will rise on increased manufacturing, etc. So for example, should Korea, China and Japan be the first to emerge from the crisis, LNG demand could increase and global gas prices would move up. The reality is that at this stage, as with so much related to COVID-19, it is really hard to second-guess what will happen. We do not envisage bullish energy any time soon.

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