Changeable weather conditions throughout January resulted in highly volatile short-term energy prices. Several bouts of blustery weather, combined with unseasonably mild temperatures, hit the UK in the first half of the month which pushed prices down. Colder conditions then prevailed and bumped prices back up as both gas and electricity demand rose. However, strong gas supply and healthy storage levels limited price spikes. European gas storage capacity is currently at around 65% which is up 10% on this time last year. Strong supply levels have prompted injections into UK storage facilities, meaning they are now filled to capacity.
Long-term energy prices remained relatively stable as a strengthening pound and tumbling carbon price, helped to offset the influence of an oil price rally. Brent Crude price surged back above $60 per barrel amid falling exports from Saudi, indicating that OPEC-led production cuts have started to take effect. A drop in US oil inventories provided additional support. If oil markets continue their upward trajectory, we could eventually see this this filtering through to drive long-term UK energy prices upwards.