Short term energy prices swung frequently throughout June as weather changes and outages affected the supply and demand balance. The heatwave across much of Europe pressured prices down to fresh two-year lows as the UK remained windy and sunny which helped ramp up renewable generation.
However on Monday 24th June, the UK electricity system price spiked due to a combination of a shortfall in generation and higher demand than expected. Prices reached £375/MWh for more than an hour before easing back as the grid rebalanced.
Warmer than average weather is forecast to return to the UK and much of Europe towards the middle of July which will likely push short-term prices further down.
Long-term energy prices have had a less volatile month, however a rise in oil and carbon prices has provided some support. Oil markets surged in the latter half of the month, primarily on the back of rising tensions between the US and Iran which added uncertainty to the oil supply from the Middle East. Further support came from reports that US oil inventories have fallen by a larger amount than expected. As tensions continue, the volatility in prices looks set to continue into July.
Carbon rose last week after staying pretty stable throughout the rest of the month. This rise came as a result of higher coal usage on the continent which increased demand for EUA certificates. We are likely to see further increases in carbon prices if we witness a further heatwave in July.