Wholesale gas and electricity prices gave up all of the recent gains in the short term market through to summer 2025 on Thursday. This was good news and enabled contracts to be struck at a fraction above 20p/KWh.
We expect the volatility to continue in the weeks ahead, but remain confident that the market fundamentals support price drop on electricity over the next 12 months of a further 10%. We don’t see prices getting below 18p/KWh.
On the generation front the price dropped back this week but only to £75.51 /MWh with fossil fuels still contributing over 20% of total generation.
| Gas: Gas prices fell yesterday following the system to be 11.3mcm long on the day. The October-24 contract traded below the Day ahead due to the expectation of lighter maintenance next month and the sell off of long hedge fund positions. Power: Power prices fell yesterday, continuing to be pressured by the gas market. Power demand for heating is expected to fall with rising temperatures over the next few weeks Oil: Oil prices rose yesterday due to tightening supply concerns. Hurricane Francine is feared to be worse than originally expected with the hurricane heading towards the Gulf of Mexico which accounts for 15% of America’s production, with an expected 1.5million barrels/day of output to be impacted. (Gains not reflected in the table below due to system catch up). Carbon (EU ETS): The ICE Dec-24 closed downwards at €65.45/t yesterday. The contract is currently trading slightly up this morning at €65.68/t. Carbon (UKAs): The ICE Dec-24 closed at £42.54/t yesterday. The contract has opened at £42.74/t without further trading at the time of writing. |
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