UK gas prices posted moderate gains during January. Gas prices rose 3.6% to 1.65 p/kWh reflecting European colder temperatures and a surged in global gas prices during the first week of January, driven by record demand in Japan. At the same time as a severe cold snap hit Japan and much of north-east Asia, Japan’s government was advising residents to keep the windows open in order to tackle Covid-19, resulting in a massive surge in heating demand.
Power prices also recorded gains, rising 2.5% to 5.64 p/kWh, tracking the surge in gas in response to colder temperatures and forecasts for greater energy demand. Gains in carbon also provided support. However, after three years of construction low carbon electricity has now started to flow at full capacity through IFA2, the new 1,000MW subsea electricity cable linking France to the UK.
Carbon recorded a 4.0% increase in European prices to €33.88/tCO2, as market participants wait to see how the UK’s own emission trading system will take shape and whether it will be linked to the existing European framework. Brent crude oil prices moved 7.2% higher during January to $55.53/bbl after Saudi Arabia voluntarily committed to cut their oil production by 1 million bpd for the rest of Q1 2021.
Current winter temperatures mean that prices are likely to remain elevated throughout February. As such, clients should be planning ahead to later 2021 and 2022 renewals, with a view to scheduling auctions for spring or summer 2021.
Clients with April 2021 renewals should speak to their account managers soon to schedule auctions for late-Feb/early-Mar.
For businesses not renewing until Oct 2021, there is more time but they should still think of locking in their renewals before the end of June.
Coronavirus (Covid-19): Last week the UK passed the halfway point towards its mid-February target of administering at least one dose of Covid-19 vaccine to 15 million people.
By the end of 30 January, 7,792,996 people UK-wide had received at least one dose of COVID-19 vaccine, according to government figures
Information on the new national restrictions, including what they mean for working from home and business closures, why they are being introduced and the financial support available: https://www.gov.uk/guidance/full-list-of-local-restriction-tiers-by-area.
Please contact your Beond Account Manager if you have any questions on the impact of lockdown restrictions on your energy contract.
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.