The first blast of winter weather across Europe provided support to UK annual gas and power prices during the first half of the month. A series of outages in Norwegian gas fields pushed short term gas prices upwards, while electricity prices found support from low wind generation and high interconnector exports, driven by souring continental prices. These factors filtered through to tighten the UK energy system. Meanwhile, long-term energy markets rose as much as 8%, taking direction from a rebound in carbon allowance prices following a new wave of buying from industrial companies and speculators.
The middle of the month witnessed a shift in price direction for both gas and electricity. Attention turned to oil markets as concerns over global oversupply and low demand dominated, resulting in a price plunge of 22%. This, combined with softening carbon prices, drove long-term UK energy markets back down, however, a volatile pound following political upheaval over the draft Brexit deal added some extra choppiness into price movements. Short-term UK energy prices also fell back down towards the end of the month as demand dropped and wind generation picked up to over 11GW, resulting in a more comfortable system.