October marks the beginning of the Winter 16-17 season, and the general upward trend in both gas and power prices has already started to show.
Naturally as the days grow shorter and temperatures drop, gas and power start to trade higher than in previous months. However, more notably this month, power prices have shot up due to a combination of reasons. In the UK, power outages occurred at both Hartlepool and Heynsham power stations, and over in France a huge amount of nuclear power stations have been closed for unexpected and urgent maintenance. These cuts created a significant drop in power supply for the UK. In fact, over the last couple of week, the IFA Interconnector to the UK reversed flows to provide support to France, and as a result the UK will be facing significantly tight power supply over the coming months.
Reports this week suggest that French nuclear production is at an all-time low for this time of year, due to announcements of additional nuclear outages across the country. Power prices have risen in accordance with this news, along with coal prices as dependence on alternative sources for power is increasing.
Fears of a `hard-Brexit` surfaced, as Theresa May announced that Article 50 that will begin the formal exit from the EU will be implemented from April 2017, which brought the GBP down by 6% against the USD. News of Brexit plans and a weaker Pound contributed largely to the sudden spike in gas and power prices over the last few weeks, which are yet to settle.
In other news, President Vladimir Putin has confirmed that Russia will cooperate with OPEC’s decision to cut the global production of Oil, in an attempt to reduce the current glut in the market. As a result of this announcement, Oil prices increased considerably, breaching the $53/bbl mark. Another OPEC meeting is scheduled to take place at the end of November in Vienna to create a strategy to reduce oil production, which will undoubtedly have yet another impact on the price of oil, gas and power.
Sources: Engie, Npower, SSE, Gazprom Energy, National Grid.
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