August 2021
Market Summary
Commodity prices for gas and electricity have continued to increase to the highest levels seen in over a decade, with September’s gas price trading at its highest level in its 25 year history. This has been impacted by low gas supplies, increases in carbon prices and low renewable energy.
Russia had a glitch with their Nord Stream 2 pipeline from Russia into Western Europe causing electricity and gas prices to plummet temporarily by 10%.
Carbon Spot Prices
Carbon prices have been more volatile than in previous months which has continued to impact on electricity and gas prices. Whilst prices have traded consistently above €53, they have increased to €56 over the week.
Carbon Emissions Spot Price Today | Trade now (capital.com)
View here for details on the carbon market.
Electricity Market
Short-term electricity prices remain extremely high, with winter 2021 prices reaching £117 MWh, and mid-August prices at £112 MWh.
Poor weather conditions have impacted on renewable energy generation with 50% of UK electricity being generated from gas fired power stations, creating price surges on contracts due over the autumn and winter.
We’re continuing to help clients to mitigate these costs by changing their procurement strategy from contracts where they pay one price for a set period, to a more flexible market driven approach.
Gas Market
UK gas prices have been strong and consistency trading above 100p. As of today winter 2021 is trading at 109 p/therm (W21) and 69 p/therm for summer 2022 (S22) partly because of low gas storage levels driving up demand.
Significant injections to UK gas storage levels over the last month should raise confidence in our winter gas supply and have a positive impact on commodity pricing.
Political issues with Russia and the construction of Nord stream 2 have also been affecting gas prices and storage levels.
Oil Market
Oil saw bearish movement of $74.10 to $65.18 during the month following the increased supply in the market from OPEC. Today oil has risen 4% to £67.15 per barrel.
The price of oil has broken the resistance line which indicates the price of oil will be very unpredictable. As we’ve seen the price increase today, we could be expecting a large downwards turn over the next couple of days.
