A mixed picture of energy prices this week. In general, prices up, though a little bit of uncertainty in the short term. Last week saw a fair degree of volatility in the short term price. Firstly, the warm weather helped suppress demand for gas, though this was offset by a reduction in imports from Norway. We also saw some currency volatility. At the start of the week, the pound was strong, which helped suppress prices only for it to weaken as the week progressed, which helps support the prices.
We also saw good renewable output on the electricity side of things, with plenty of wind and solar as the week progressed, though that is going to fall off this week. There’s also some uncertainty about the way that the weather will go for the remainder of this month. Generally forecasters seem to suggest it’s going to be warmer, which is helping keep the prices down. Further out on the curve, there’s no doubt that a rally in oil prices last week has helped increase the overall cost of energy, despite the fact that as the week progressed, those oil prices fell away.
In terms of outlook, it’s very difficult to anticipate what’s going to happen, of course. However there is certainly a positive trend over the last couple of weeks suggesting maybe that the market thinks that energy is a little undervalued at the moment, which may continue to push prices up.
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