Short-term power hits record low with reduced low lockdown demand
Monday 4th May 2020
Global energy markets over the past fortnight have been dominated by the crash in the cost of oil, with reduced lockdown demand leading the negative costs for the first time ever on the main US index. Whilst Brent crude has now recovered to more-or-less where it was mid-April, it is still at a very subdued level, lending bearish sentiment across the wider energy complex. UK power and gas have not seen direct correlation with the roller-coaster changes in oil, but there have been records set, particularly in the short-term market. For example, May ’20 month-ahead gas want off the board at the lowest month-ahead cost for 17-and-a-half years; Day-ahead power saw its weakest ever weekday value recorded. The short-term values are low due of course to the supressed demand during lockdown but also due to the relatively cheap generation that record solar output has brought – the prolonged sunny April and clear, pollution-free conditions have been ideal for solar power, with massive GW output in the UK and Germany. On the Annuals, there is a touch more bullishness with the expectation of increased demand for Winter ’20 (post-lockdown), but generally, the indices remain weak.