Initially tracking a bullish carbon market upwards moving into May, short term prices saw a sharp fall into the second week of the month, with contracts dropping £9/MWh following the easing of supply concerns by the earlier-than-scheduled return of the temporarily offline IFA2 interconnector. Other drivers such as higher wind output also added downward pressure.
Bullish carbon markets, and gas markets supported by LNG supply concerns drove near-curve contracts upwards into mid-month, with prices hitting £85/MWh by May 13th, further support coming from increased demand following the outset of a spell of colder-than-average temperatures. Day-ahead markets fell sharply to a month-low of £60.43/MWh into the third week of May, as uncertainty surrounding the new post-Brexit carbon trading scheme saw carbon markets fall, combining with a strong wind generation outlook to put pressure on short-term power markets.
Short-term prices rebounded once more into month-end, with a recovering carbon market bouncing back over the last week of the month, reaching a month-high £85.21/MWh on May 27th. Losses were seen into the last days of May, as lower demand amongst warmer weather combined with an increase in wind generation to put pressure on contracts; day-ahead prices finished the month just over £7.5/MWh higher than they started it despite this downward movement.