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Energy Market Update – 31st May 2018

Key Points:

  • UK Gas and Electricity prompt prices continue rising, while the forward curve is stabilising.

Electricity Prices:

UK Electricity prices, for a short-term delivery, continue to rally amid lower wind generation. Day ahead prices are currently trading at £58.75/MWh and month ahead is at £56.95/MWh. The power generation mix is currently supplied by Nat Gas by 50%. The rising prices of natural gas are the main driver behind the surging front electricity curve.

Elsewhere on the curve, prices are trading sideways. Electricity Win-18 contract is currently at £62.20/MWh, whereas Sum-19 is trading at £49.36/MWh.

UK Natural Gas prices:

UK Natural Gas prompt contracts (day ahead and month ahead) are trading higher this morning. Day ahead and month ahead are at 61.00p/th and 59.30p/th respectively. Due to lower wind generation, demand for power generation remains strong and is currently nominated at 64mcm/d. Medium range storage withdraw is lower today, so the supply/demand balance is quite tight.

Further out the curve, forward Gas contracts are stabilising. Win-18 has not moved much since yesterday and is currently trading around 62.45p/th, while Sum-19 is up at £49.60/MWh, up by 0.3%.

Macroeconomics:

The Consumer Confidence Index improved in the month May. This could be interpreted as a sign of recovery from a weak start to 2018. According to Reuters, the GfK gauge of consumer confidence matched its highest level in a year, rising to -7 from -9 in April, just above the median forecast of -8 in a Reuters poll of economists.