Wednesday 6 January 2016

New year, new contract lows – Y report

New year, new contract lows – Y report

Power and gas prices have started the year trading at new contract lows, according to Inenco’s Y report.

Stuart Lea, Head of Energy Trading said: “Oil price remains subdued predominately staying below the $37 per barrel level.

“There’s little out there on the horizon that indicates that prices may move up and indeed some market analysis suggest there’s still room for them to fall even further.”

On the gas system, there are “very healthy” flows into the UK and new LNG deliveries are expected to enter the country.

Mr Lea added: “Our storage levels are very high for this time of the year. These all suggest that prices on the spot market could fall even further.”

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It is a good time for customers to place fixed price contracts due to low prices, according to Mr Lea.

He added: “If you did, you’d be looking into commodity prices below what you’re currently paying.

“However if you wanted to take more risk and to hold, you may find you can secure lower prices in future days and weeks.”

Customers looking to place flexible contracts with low hedges “may take some volume at these levels”.

Mr Lea said: “If you have a high hedge in place, then maybe you’ll decide to do nothing and just to see if you can get any further price improvement.”

Written by

Bruna Pinhoni

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