Last week, we saw prices increase fairly consistently for the first time in about a month. This was driven in the short term by outages in Norway which reduced imports into the UK and kept the gas system short and that, in turn, was supported by a relatively weak pound. Further out along the curve, analysts have been reporting the resurgence of oil prices as the reason for the curved prices to increase as well. That’s not always the case that we’ve seen in the past. Oil prices are not as linked to energy as they once used to be but at the moment, that seems one of the key reasons for the increases.
On the electricity side, we saw that the wind generation fell off once again supporting the overall increase in prices. However, as the week progressed, temperatures started to improve and solar power began to kick in as well. Looking forward, we’re expecting a warmer forecast for the remainder of May with increased solar outputs so we might expect prices to fall back a little bit. Of course, there is an OPEC meeting due and a non-OPEC meeting which if the quotas are extended could help support oil prices further and could push energy prices up along the curve as well.
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