Power and gas prices are expected to be softer compared to last week.
That’s because supply and demand fundamentals have improved which facilitates lower prices, according to Inenco’s Y report.
Energy Trader Dorian Lucas said: “Looking at seasonal prices the risk is that they are going to increase this week. Main reason for that is that we are approaching delivery on the winter 16 contracts and with a lot of buyers we are potentially going to see people entering the market to secure that contracts.”
As a consequence, customers looking to place fixed price contracts should do it now before any volatility in the prompt market impacts seasonal prices.
Mr Lucas added: “There’s a number of reasons for that so we’re expecting very tight gas supply as we’ve seen outages at Rough storage. We are also seeing the impact of minimum supply margins and their tightness during September with prices pushing up as high as £160/MWh. The risk is that could become more regular during the winter season.”
Decisions made by customers on flexible contracts depend on their attitude to risk.
He went on: “If you are risk averse I recommend taking all of the winter season and possibly summer 17 as well, just to mitigate any impact of prompt volatility. However if you are more risky there is a potential downside during Q4 season particularly with gas. We’re expecting an influx of gas supply during Q4.”