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Commodity Prices Hit All-Time Highs

September 2021

Market Summary

Commodity prices for gas and electricity have continued to increase to extortionate levels not seen before, with gas prices alone seeing a 70% rise in August/September.

In comparison, electricity prices at the start of 2021 were approximately £50/MWh, whilst over the past week prices have reached over £200/MWh.

A mixture of low gas supplies and storage, low renewable energy and increases in carbon prices are all major factors. This has put some domestic energy suppliers out of business.

Recent high levels of wind generation has taken some stress off the grid, contributing to 44% of the electricity generated. Unfortunately this has had little effect on prices owing to the other factors driving the market.

Carbon Spot Prices

Carbon prices have been more volatile than in previous months which has continued to impact on electricity and gas prices. Carbon prices have reached new highs of €61.27, with recent price swings of €2 increasing the overall price by 4%.

After the announcement of the UK being forced to turn to coal power stations, we are expecting a bullish effect on prices into October.

Electricity Market

Short-term electricity prices remain extremely high with Winter 21 rates reaching £204 MWh.

Prices have been affected by carbon hitting new highs and thin liquidity in the market, reaching £186 MWh (W21) and £101 MWh (S22).

Gas Market

UK gas prices have hit all-time highs as highlighted in the news with Oct 21 prices peaking at 189.65p/therm following the news of the incident at National Grid’s IFA1 interconnector. W21 is currently trading at 181p/therm and S22 93p/therm.

Russian-owned gas supplier Gazprom has continued to limit supply to Europe causing further concerns over UK gas storage as we go into the winter.

Oil Market

Since late August we’ve seen the price of brent oil climb 20.30% from $64.89 p/barrel to highs of $77.72 p/barrel. This bullish sentiment could see oil reach $80 p/barrel by the end of September if the trend continues which is a result of stock draws, lower OPEC production and stronger demand in the Middle East. Analysts are expecting oil to reach $90 p/barrel by the end of the year.


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