Gas and power demand to increase – Y Report

This week’s temperature is forecast to dip below seasonal averages, which will see day-ahead gas and power demand increase. Ongoing nuclear outages in France mean the UK is continuing to […]

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By Jonny Bairstow

This week’s temperature is forecast to dip below seasonal averages, which will see day-ahead gas and power demand increase.

Ongoing nuclear outages in France mean the UK is continuing to export power to the continent, according to Inenco’s Y report. As the UK would usually be importing at this stage of the year, this has resulted in a 4GW net deficiency.

Any changes to Rough storage withdrawal announcements from now on will be likely to cause price volatility.

The end of daylight saving time will see demand for power increase as more lights get turned on.

Day-ahead gas is still trading at 19-month highs due to outages limiting supply into the UK. Falling temperatures are adding to demand.

Energy Trader Dorian Lucas said: “For customers looking to place a fixed-price contract, I’d urge you to do it for the front 12 months as soon as possible. In terms of 24 to 36 months, it’s down to attitude to risk. There is potential for prices to turn lower at the start of next year if we get very low demand during winter but it’s by no means assured so if you’re looking at prices now and think they’re reasonably good value, I’d recommend hedging out for a further period.”

He added people with flexible contracts need to extend their supply agreements to capture current lower prices further out from delivery.

Mr Lucas said: “In terms of trading, at the moment we’re very clearly in an uptrend so the view from us would be to increase your hedge appropriately with a view to potentially unwind those hedges later down the line if we see prices turn lower.”

Market trends will be part of the discussions at the Energy Live 2016 conference in London on Thursday. Join in the debate using #EL2016.