It's been a busy few weeks on the energy markets. The US elections appear to have had an influence on the price of Brent crude oil, and a period of mild weather has also affected wholesale energy prices across the board. Oil peaked at a two-week high of $110.8/bl, although coal prices at the pumps remained relatively stable. For the first time in a while coal prices also climbed and across the board prices have been on an upward trend, and even though clean dark spreads were up as well, they remain 20% lower than this time last year.
Starting with baseload electricity prices, rises in coal and oil costs pushed up longer-term prices, as expectations are that both these markets will continue to rise. The annual April 13 contract rose 0.6% to £52.0/MWh, although shorter term power prices fell as both wholesale gas prices and demand dropped. Day-ahead power also fell 10% to £47.3/MWh, thanks to improvements in supply.
Peak electricity prices basically followed the same line as baseload, with annual April 13 contracts up by 0.6% to £59.0/MWh and day-ahead down 11.9% to £56.4MWh. Day-ahead still remains 7% above last year's figures, despite the drop in price.
Overall, shorter term prices were helped by a spell of milder weather, although recent flooding and bad weather in the west of England may result in local fluctuations on demand over the coming weeks.
Coal Shocker
The big surprise over the last few days though, has been coal. Prices, which have previously been flatlining due to an excess in supply and reduced demand from some of the big consumers such as China and the US, have bounced back by 1.3%. This has pushed the weekly average price up to £94.5/t, thanks to high levels of European demand.
Imports and storage of gas dropped, as the total gas supply fell by 1%. The peak was reached on the 5th November, at 290mcm. However, some storage withdrawals have gone ahead to compensate for the low level of LNG and interconnector supplies.
Small but significant rises
The seasonal gas prices have seen a slight rise recently too, possibly in anticipation of a spell of cold weather that has been predicted by many watchers. The result has been a rise in winter gas contracts by 0.6% on average, and winter 13 prices confirm this level of increase, up 0.6% to 70.1p/th. Summer 13 prices are up 0.4% to 61.7p/th. While these increases are relatively small they are significant, and it does show an overall trend gradually upwards, perhaps in anticipation coal prices of further end-user increases later on next year.
One thing that could have an impact on future wholesale energy prices as we move into 2013 is the proposed change in end-user tariff systems. Currently, clean sparks are up due to higher prices, but are still well below last year's figures. Clean dark spreads dropped due to the increase in coal prices, but this could fluctuate if the new tariff proposals are introduced and wholesale suppliers come under increasing pressure to drop both gas and electricity prices.