UK gas and power prices posted surprise losses during July. Gas prices fell 7.5% to 0.94 p/kWh reflecting uncertainty over energy demand as emerging data implies a possible early second wave of Covid-19. Stable pipeline flows and LNG deliveries continued to supplement injections into gas storage, which was already 22% higher than it was at the same point last year. Gas stockpiles in Europe have increased to 88% of capacity, compared to 66% at the same point in 2019, meaning that less storage capacity needs to be refilled during the last couple of months of the summer gas injection season.
Power also declined last month, slipping 5.4% to 4.01 p/kWh as the potential hit to demand of a second wave of Covid-19 across Europe could have a material impact on power grid demand. The potential drop in European power demand across Europe resulted in a 5.3% drop in carbon prices to €25.49/tCO2 driving power prices lower.
Despite the risk of a second wave of Covid-19, Brent crude oil prices edged 4.3% higher during July to $42.94/bbl as countries across Europe saw a measurable ramp up in economic activity, with Covid-19 lockdown restrictions generally easing.
Despite an ongoing recovery in energy markets, UK gas and power prices are still not far off record low levels and so are still extremely favourable for clients looking to lock in savings for long-term energy contracts, as long as action is taking quickly.
The UK and many other European countries have already eased lockdown restrictions meaning we will see energy demand increase, boosting prices. The volatile nature of energy markets means businesses should start their energy renewals immediately, and consider locking in longer-term gas and power contracts by the end of August.
Coronavirus (Covid-19): Please be aware of government guidance regarding Covid-19: “Stay at home, save lives”.
– stay at home as much as possible
– work from home if you can
– limit contact with other people
– keep your distance if you go out (2 metres apart where possible)
– wash your hands regularly
Please contact your Beond Account Manager if you are at unsure what impact Covid-19 may have on your energy contracts.
Government unveils £1.5bn support package for arts sector: The UK Government has unveiled a £1.57bn support package to help protect the futures of UK theatres, galleries, museums and other cultural venues. However, there’s no plans to resume live shows.
Guidance for a phased return of the performing arts, starting with performances behind closed doors and rehearsals, is expected to be published by the government shortly
Germany passes ‘coal-free’ exit law to phase out fossil fuels by 2038: Germany‘s Bundestag, the lower house of parliament, recently passed a ‘coal-exit’ law to stop all fossil-fuel generation facilities by 2038 at the latest and abandon nuclear power by 2022. To support the transitional energy change, the government will support lignite regions, power plant operators and employees with grants of up to €14 billion (£12.6bn) by 2038.
Disclaimer: These views and recommendations are offered for your consideration and Beond makes every effort to ensure that the data and information in this report is accurate. However, due to the volatile and unpredictable nature of the energy markets, Beond cannot guarantee the accuracy of both the information and the recommendations provided. Beond does not accept any responsibility for errors or misstatements, or for any direct, indirect, consequential or other loss arising from any use of this information and/or further communication in relation to this information.