Wholesale gas and electricity prices dropped markedly on Friday, ending the week lower. We expect continued volatility but with a general downward trend in the wholesale markets. Retail prices remain subdued, which is good news, and longer-term contracts (2- and 3-year) are currently noticeably cheaper than 1-year deals. Depending on your appetite for risk, this presents an opportunity to secure budgetary certainty if desired.
| Gas: Gas prices fell at the conclusion of last week. In the prompt, domestic demand is expected to fall which combined with an upward revision of renewable generation. Demand is expected to be 155mcm/day, 13mcm below seasonal average. In the curve, the British hub is expected to be oversupplied in Q3 due to domestic production, Norwegian imports, and LNG regasification far outweighing demand. Power: Power prices softened at the end of last week. Wind generation is expected to generate above average over the week in the prompt. Curve prices were influenced by the wider energy complex, namely the declines in carbon and gas. Oil: Oil prices traded near flatly at the end of last week but leant slightly towards bearishness. U.S Economic and tariff news mixed with concerns around oil supplies as the EU decided on further sanctions for Russia for its ongoing war in Ukraine. The EU plan to set a moving price cap of 15% below the average market price, aiming to improve on the $60/barrel cap previously set in December 2022. Oil prices fell 2% on the week. Carbon (EU ETS): The ICE Dec-25 fell further last Friday, falling to €69.89/t. Opening at €70.04/t this morning, the contract is currently trading at €70.41/t. Carbon (UKAs): The ICE Dec-25 fell to £49.21/t at the end of last week. The contract opened at £49.40/t this morning and continues to be selling at this price at the time of writing. |
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