Gas and power prices to fall – Y report

UK power and gas prices may fall this week, according to Inenco’s Y report. That’s due to higher temperature forecasts which will reduce demand. Stuart Lea, Head of Energy Trading […]

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By Jacqueline Echevarria

UK power and gas prices may fall this week, according to Inenco’s Y report.

That’s due to higher temperature forecasts which will reduce demand.

Stuart Lea, Head of Energy Trading at Inenco said: “We see a reduction in demand which together with an increase in renewable generation forecasts should see both gas and power spot prices fall. This would also see a fall in the summer 2016 gas and electricity prices.”

Oil prices are another key driver for electricity and gas prices in the country.

Mr Lea added: “If we take a look at oil which is driving winter 2016 and beyond, the market resisted a move above $36/bbl (£24.4/bbl) last week and talks of potential production cuts seem to be death in the water so we may also see a fall in oil price this week which will bring forward gas and electricity prices down as well.

 

“It’s worth remembering that there are still concerns about generation margins in winter 2016 and beyond so these contracts may continue to hold some of the value they currently have.”

There seems to be limited downside potential but there are warning signs of a potential price increase, according to Mr Lea.

It may be prudent to target the lower area of the current price band to increase hedge levels for customers on flexible contracts, he added.

Mr Lea went on: “If you’re on a fixed price contract prices still offer a really good value and still is a good time to place contracts.

“Whether you’d be on a flex contract or on a fixed price contract, do have a long term price horizon because they’re excellent value in prices further out.”