The UK’s Day-Ahead gas rose by a further 4.7% to 38.00 p/therm, as temperatures continues to cool increasing heating demand.
Day-Ahead power fell by 3.6% to £42.26/MWh following healthy electricity supply from wind generation throughout last week.
December 2020 power has seen a small price fall of 1.2%, following news of the IFA2 power link between France and the UK increasing potential transfer of electricity from 2GW to 3GW, increasing the UK’s supply.
December 2020 gas saw a marginal rise of 0.7% to 40.27 p/therm as LNG supply fell back in line with high UK gas storage, which sits at 96.5% of full capacity.
Summer 2021 gas increased by 1.3% this week, to 34.22 p/therm as, previously mild seasonal temperatures are drifting towards norms.
More significantly for forward gas contracts, increases in the likelihood of a ‘La Niña’ event look to bring heavy rains to the Australasian and South-east Asian regions. In 2012 this led to both major surges in Chinese coal demand and widespread coal disruption due to Australian and Indonesian mines flooding. This would see increased demand for gas as a coal substitute. The US oceanic and atmospheric administration (NOAA) place the current likelihood of a ‘La Niña’ event at 65%.
Gas and Electricity contracts have risen since lockdown driven falls last week. It is likely that average prices will continue to rise as we move further into Winter, therefore the recommendation remains to lock-in now or, if possible, wait until Summer 21.