Energy Market Update – 22nd May 2018
May 22, 2018
- UK Electricity and Gas prices soaring today, reaching a new high amidst rising oil and coal prices.
- The ONS announced that the UK debt dropped by 18.5 bn in March -18, while Bank of England expects an improvement in the UK economy after a period of stagnation.
UK Electricity Prices:
UK Electricity prices are trading higher in line with Nat Gas counterparts. The Day Ahead contract surged 3.4% reaching £56.25/MWh, while Month Ahead is up by 1.63% consolidating at £56.38.
Further out the curve, the Winter-18 contract is heading towards £63.00/MWh mark. Prices are driven by volatile coal and oil markets. The front winter price has reached the contracts highest high today.
UK Natural Gas Prices:
Near delivery contracts are trading higher boosted by the rising cost of oil and a major outage at the Vesterled pipeline. In fact, the day ahead price has rallied to 58.80p/th, up 3.16%, whilst month ahead is at 58.13 p/th, 2.17% up compare to yesterdays close.
Winter-18 contracts are still on an upward trajectory. The current price breached the level of 65p/th and heading towards 66p/th. Oil prices surges ahead of OPEC meeting this week. According to www. oil.com, key oil ministers and company executives will gather in Russia later this week for the St. Petersburg International Economic Forum, and expectations are that the meeting will provide the venue for some talks and comments about the OPEC-Russia production cut deal and the sanctions on Russia.
Since the beginning of this year, the UK economy has been in a stagnation stage. However Mark Carney, the governor of the Bank of England, said that Britain’s rate of economic growth is likely to rebound in the second quarter. As a consequence, we may expect “a gentle” rise in interest rates to beat inflation. The growing cost of gas and electricity have certainly contributed to growing inflation.
At the same time, it was announced that UK borrowing fell to the lowest level in a decade. According to the office on National Statistics, debt dropped by £18.5bn.