Utilities Market Knowhow!

After two months of relative stability within the Year Ahead Gas and Electricity Wholesale markets, we have seen the steady decrease of prices, since our last report in February. 

Compliance with Oil production cuts announced by the, Organisation of the Petroleum Exporting Countries (OPEC), was high, through January and February. Their intention was to stimulate the price of Oil, but with US output up to levels last seen in 2015 and considerable stocks, prices are holding in the region of $55 barrel. 

Through the winter we had limited access to the Gas supplies in Rough (our largest Gas storage facility). This lack of availability at the time of high demand was a pressure on prices and continues to be, when colder spells are forecast. Milder spring temperatures may help ease costs, as will the stability of Oil prices, which are linked to Gas and Liquefied Natural Gas (LNG) deliveries, booked for March. 

With Gas being the main source of generation, Electricity prices have followed Gas downwards. In February we saw the highest monthly % contribution from Wind since December 2015. Imports from Europe gained strength, but are still below usual levels. This should improve through March. 

Coal prices have fallen, helped by news that President Trump will actively encourage production. China may look to avoid over supply, by restricting the number of days that production can take place, as their higher seasonal demand ends. Lower Coal prices reduce our generation costs. 

We still appear to be on track for Brexit to be triggered by the end of March. The £ did gain some strength through February, but these gains have since been lost. The weakness of the £ increases our cost to import. 

What does this mean for me… 

The Year Ahead Wholesale price graphs show decreases for Gas and Electricity. For contracts which need to be closed within the next few months, it is worth considering contracting now with the improved value. 

For contracts further out, they are still worth looking at, to take advantage of lower prices or possibly track closely. The outlook is looking more positive, but there is still uncertainty as to which direction prices will go. 

We would be happy to research your options for 12, 24 and 36 month contracts.

Should you require further information, contact your lpm Estates Manager now.

Life Property Management work closely with utilities broker Indigo Swan, to bring the best energy rates to their clients. Indigo Swan’s Market Knowhow is a regular, comprehensive report on the position of the Utilities Market.

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