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In the UK, cooler weather saw demand rise and despite healthy supplies and high wind output, the system was slightly undersupplied. The colder British weather sparked an increase in demand, resulting in the system being under-supplied (although only marginally). This was surprising considering good supplies and wind output. There were continued arrivals of LNG to the UK helping keep supplies up, but this market influence was countered by a forecast of colder weather to hit as we approach the New Year, resulting in curve prices gaining. More Sterling drops against the Euro also pushed prices up. Electricity continued to track gas as wind output was strong for most of the week. As there were no other supply problems, early coal and carbon falls were tracked but reversed later in the week.

Gas price rises slightly more than electricity

There were minor gains on all annual contracts, with gas rising more than electricity, again though only marginally. However, looking beyond the imminent weather forecasts, a colder winter seems unlikely and therefore this knocked prices down by around 3%. This pricing volatility looks to continue as the forecasts change and until we have a clear direction for the oil market. Brexit-wise, should UK stay in Europe, Sterling will strengthen and this will help bring energy prices down. The risk-takers amongst us may want to keep an eye on the market with the potential for falling prices. Just bear in mind there will be plenty of volatility.