Annual gas and power prices have continued to fall into the New Year. The same drivers which had been present before the Christmas break have pushed contracts to new lows, with the plummeting value of crude oil a significant factor. Oil has hit 5 ½ year lows amid concerns over oversupply and signals of global economic decline. Another catalyst for the more recent reductions has been Ukraine paying Russia the second half of its gas bill debt. This reduces the potential for disruptions in Russia’s exports to Europe, which transits through Ukraine. Meanwhile, the general health of the system, with good imports and storage levels coupled with subdued demand, has added to the downside for prices. Despite being used for balancing and to feed exports to the Continent, storage remains over 80% full and three LNG cargoes have already been booked for January delivery. Power demand has recovered since the Christmas break, but remains down year-on-year and a larger part of this demand is being met by nuclear power, which returned to over 8GW capacity after extended maintenance. This has offset the need for gas in the generation mix, which is also contributing to the subdued gas demand. There remains the potential for cold snaps, but the energy supply system has coped with conditions so far and pricing indicates this is expected to continue.
With the current market levels at a near 4 year low we are recommending to all clients with a 2015/2016 electricity & gas contract renewal to go to market now for new pricing. Please contact Syntegra Energy Utilities: gl@syntegra-epc.co.uk or 08450 091 625 regarding our transparent Online Energy Reverse Auction Platform and we can assist you.
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