Whilst Annual power prices have generally edged higher over the past fortnight (with a fair bit of volatility) the short-term market has hit extraordinary new lows. The spring bank holiday weekend saw prices enter negative territory with very high wind generation and low lockdown demand. There was a surge in exports to balance the system. Short-term gas was also weak as consumption remained low, with month-ahead prices hitting a 22-year low. The weakness in short-term gas is more reflected in the continued downturn of gas Annuals.

Longer term energy indicators have been a little more bullish as the lockdown eases across Europe. Brent crude has hit a 3-month high as the hurricane season starts in the Gulf of Mexico and OPEC+ cuts are increased. There has also been a rise in carbon costs as industrial consumption restarts and the inevitable increase in pollution follows. There is some upward pressure still from post-covid nuclear refuelling and outage schedules in France – the French nuclear industry is an important driver of European prices, so any changes to expected output raise supply concerns. There are different thoughts on demand in the next few months, so how much of the French nuclear fleet remains online is key.

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