Gas and electricity contracts at new lows

Annual gas contracts fell in June after they had initially risen to 47.0p/th due to worries over a production cap in Groningen, which limited the supply. Groningen is Europe’s largest gas field and has imposed an output cap of 30bcm after an EU court ruling. However, this rise was then counter balanced by strong Russian and LNG supplies, eventually pushing down prices. The Greek crisis has also had an effect on gas prices, with the euro weakening against the pound, imports have been a lot cheaper.

The Winter 15 power contract hit its lowest levels since the contract opened, dropping by 0.6% to average £45.9/MWh. Day-ahead power contracts however, have went up by 1.2% to average £41.6/MWh from levels seen in May. The day-ahead gas prices however, have fallen to their lowest levels since August 2014 to 43.5p/th.

Oil prices returned to a downward trend in June after OPEC leaders again decided against cutting production. The price fell by 2.7% over the month to average $64.0/bl, however, prices have since fell even more since then and Brent Crude now sits at $57.29/bl. With the Iranian export ban expected to be lifted because of advancing negotiations with the United States, the extra supply in the market is expected to push the price even lower.