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Expert energy market analysis market report 27/8/19

WEEKLY ENERGY MARKET REPORT: 27th AUGUST 2019

Ignite bring you the latest energy news across the UK and Europe. We track and analyse changes in the energy market to keep you informed and up to date. Here’s the latest news from the UK, Europe and the rest of the world.

British wholesale power and natural gas prices continued the downward movement in the past week amid strong renewables generation and a relatively comfortable gas system during most days.

On the wider energy commodity complex, oil prices exceeded the $60.00/bbl level on Wednesday however, after the US inventory data were released, we saw prices coming down and trading at the level of $59.00/bbl.

On the Brexit front, the Pound is currently trading at £1.103 following the latest developments. The markets have seen the outcome of the recent talks between the UK PM and EU officials in a positive light. The French president suggested that a Brexit deal could potentially be amended thus adding support to the Pound.

The UK energy market last week

  • The wholesale power market in Britain retreated further this week by 2% on the curve contracts, on average, in the last week.
  • Strong wind generation contributed more than 30% of the overall generation mix in Britain during most days.
  • As of this morning, power prices seem to have softened further due to a cooler than previously expected outlook and an increase in renewables generation.

UK Natural Gas prices

The British wholesale natural gas prices dropped by 1.4% on the curve contracts, on average during last week.

Day-ahead closed the week at 27.30p/th, that was 5.0% higher, week-on-week, while month-ahead decreased by 1.2% within-week and settled at 29.70p/th.

In terms of curve contracts, Win-19 fell by 1.9% before settling at 46.40p/th whereas Sum-20 dropped by 1.6% at 43.05p/th.

UK Electricity Prices

British wholesale power prices mirrored the natural gas movement. Prices dropped due to strong wind generation and a drop in underlying fuels.

Day-ahead increased by 2.5% and closed at £39.30/MWh while month ahead decreased by 2.2% and settled at £40.45/MWh.

Win-19 settled at £51.64/MWh and Sum-20 at £47.19/MWh, a decrease of 2.3% and 2.5% within-week for both contracts respectively.

Macroeconomics

The Consumer confidence index in the Euro Area dropped further to -7.1 points in August (-6.6 points in July) as households’ view on the overall economy and their financial situation is less optimistic for the near future. By looking at the EU as a whole the consumer confidence index went down by 1.1 points to -7.0.

what to watch this week

Outlook: This week we would expect an increase in wind generation that might reach 9GW on Friday. Therefore, we might see reliance on CCGT dropping as we progress in the week, thus adding pressure on prices.

Friday August 30: The UK’s consumer confidence index for August will be published. The consumer confidence index gives a good idea about households’ views on the overall economy and their financial situation.

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