Since our last Market Knowhow Report, Gas and Electricity Wholesale prices have decreased further and remain comparable to the lows we saw in 2016.
Brent Oil has fallen to below $20 a barrel; the lowest price since 1999. The US Oil equivalent to Brent (WTI) has taken a considerable hit and plunged to negative figures, meaning buyers were paid to take Oil stocks from producers. COVID-19 continues to reduce global demand, leading to significant over supply. A historic agreement between OPEC and Russia to cut production is due to begin in May 2020 but Saudi Arabia is considering an earlier reduction in production to support the global Oil price.
Gas prices have fallen following strong supplies of LNG. UK and continental gas demand continues to be low and Gas exports to Europe are limited as a result. Domestic consumption and gas used for UK power generation are both low because of mild and windy weather across the country. On 21 April Wind accounted for over 35% of the UK’s power generation with Gas providing 28% of the mix.
The Met Office forecast is for sunny and dry weather for the rest of April. Unsettled weather with blustery winds is expected in May. This should increase Wind generation and keep prices subdued.
Wholesale prices are extremely competitive. It is advisable to request supplier offers for all 2020 start contracts, but be aware some energy suppliers are focusing on their existing contracts due to resource issues. There may also be value considering early 2021 contracts. Contact us to look at your options.
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