Cooler weather often ushers in a spate of higher gas and power prices – but confidence in supplies has kept a cap on this so far, according to the weekly market report from npower.
Sammy Blay, Client Portfolio Manager said: “Despite an uptick in gas demand we did see prompt and near term power prices come under pressure as supply confidence going into this winter persisted.”
Prices were kept strong by weak wind though, he said: “There were occasions of strength on the prompt and near term prices as wind output was relatively weaker sometimes and we did obviously see a rising demand due to the cooler weather.”
He added: “Nonetheless supplies of gas from Norway were abundant and we had one nuclear plant returning back online, Dungeness, after the outages due to the storms.”
Gains in the British pound after a surprise cut in the interest rates by the European central bank also had an impact on gas buying in the market: “It basically just made it cheaper for UK gas buyers to buy [in] the euro denominated central gas market.”
There was “huge selling” in the oil market with Brent crude falling below $103 a barrel last week when the talks in Geneva with Iran over a nuclear programme looked to be on the right track but the price clawed its way up slightly by the end of the week.
Looking forward heating demand is expected to rise to levels usually seen at this time of year as temperatures drop, said Mr Blay, pushing up gas demand which will “likely see a halt to the decline seen recently”.