Wholesale Price Snapshot December

 
The Annual April 16 gas contract fell 9.0% over November to average 36.9p/th, as lower oil prices and a strong supply outlook weighed on the contract.

 

Rising supplies of imported liquefied natural gas (LNG) are expected to continue in the medium and long-term, with imports up 35.9% in November compared to the same month last year.  Annual April 16 power followed gas and coal prices down, slipping 6.3% to average £39.1/MWh, and reaching a contract low of £38.3/MWh on 12 November.

 

Spot gas and power contracts also decreased. Day-ahead gas fell 9.2% to average 36.0p/th, reaching a five-year low of 33.4p/th on 12 November. This resulted from forecast temperatures being 20.6% above the seasonal norm. Day-ahead power fell 5.7% to average £38.1/MWh, hitting £35.0/MWh on 12 November: the lowest price since July 2014. Greater wind generation, up 91% on the previous month, and mild temperatures depressed prices.
Brent crude oil declined 6.2% to average $46.4/bl in November.

 

Oil began the month rising on supply concerns from Libya and Brazil. However, prices later declined, hitting a three-month low of $43.9/bl on 23 November, amid weak Chinese demand data, high OPEC production and record high OECD crude inventory levels.
API 2 coal declined 2.7% to average $47.0/t, hitting a fresh low of $45.8/t on 23 November.

 

Previous expectations of continued strong demand growth have triggered major investments in supply in recent years. However, actual coal use has fallen short, resulting in over-capacity and plummeting prices. Dwindling demand in the US and China have caused prices to slip further.
The price of carbon in the EU’s Emissions Trading Scheme rose 1.4% to average €8.5/t, the eighth straight monthly rise. This trend is expected to continue as EU reforms to the scheme to tackle oversupply in the market continue to be felt.  

Oil cartel the Organisation of the Petroleum Exporting Countries (OPEC) made a decision last year to maintain high production levels, resulting in a supply glut that sent oil prices down. The group met again on 4 December, where they agreed to maintain production at current levels, leading to further falls in the oil price over recent days, hitting an 11 year low on 14 December.