The first half of July has seen some price decline on Annual power curves – this has been most pronounced for October ’17. However, the Annuals have been relatively flat compared to the short-term market with Day-ahead spiking up to £70/MWh on 10^th July as wind generation fell at the same time as several power station outages. However, as wind cranked up and gas prices fell, so the day-ahead market corrected (closed yesterday below £39). Whilst the decline in Annuals is encouraging (following the lead of gas), this has been tempered by rising coal, carbon and European power prices.

The decline in gas Annuals (so often the mirror of power curves) has been far more pronounced than electricity in the past few days, with a nine-and-a-half month lows hit on the October ’17 curve. There have been some bearish drivers – oil was weak last week (although seems to be heading back to $50 today); the first US LNG shipment for 50 years arrived in the UK; the closure of Rough means that the reserve of gas held will be extracted in the coming months, potentially inundating the market. There is now less value in the ’18 and ’19 curves as the buffer of Rough has been factored out of considerations.

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