Energy Update for 13th June 2017
Last week, quite a few interesting things were happening in the markets. However, by the end of the week, prices turned out around about the same level that they started at.
At the start of the week prices were ticking up, particularly on the gas side as two LNG tankers were redirected away from Britain, and as renewable energy was particularly weak. However, demand continued to fall away and the system remained long, so prices corrected themselves and there was significant wind output on Tuesday and Wednesday, resulting in prices softening.
As the week progressed and renewable energy fell away, then the country became reliant on gas. By Friday 36% of generation was from expensive gas fired sources and as a result prices ticked back up again. Overall the longer term winter prices have been increasing primarily as a result of coal prices. Oil however has been a lot more uncertainty. Large inventories in the US having a negative effect that we see on prices. However, there’s a fair degree of geopolitical uncertainty in the Middle East with the Arab states falling out with Qatar creating some uncertainty in oil, which continues to trend downwards with the occasional recovery.
And of course we can’t not mention the hung parliament that resulted in a weakened pound to the euro, which always has a positive impact on energy prices here in the UK.
Looking forward all we can say is there’s a high degree of uncertainty around what’s happening in the fuel mix complex. Oil prices looking to be very volatile and of course the political situation here creating a fair degree of uncertainty, which may well also impact on the longer term price situation.
If you have any questions about this report, or anything else that’s going on in the energy industry, or anything that might help your business improve its efficiency and profitability then, please contact Auditel for a no obligation Strategic Cost Review