The market update - October

Market prices during September were broadly flat, ending the month slightly higher for longer term products (like Winter 2019 and Summer 2020). But short periods throughout the month were very volatile.

Around the 10th of September, EDF announced that their fleet of nuclear generators across France may have contained sub-standard parts. Nuclear accounts for almost 80% of France’s generation capacity and so this sent shockwaves through the power and gas markets. Due to the France-UK interconnector, any supply shocks will be translated across the Channel. Prices surged 14% in one trading session – and this on a report that there only might be issues. This also coincided with news that Gazprom had to cut gas supplies to Europe and the Dutch gas field Groningen would stop production earlier than anticipated.

The markets were in a bullish trend in the middle of September and this was compounded by attacks on Saudi Arabian oil assets. The attacks led to a 5% drop in global oil output and the price for oil to spike 20% – the largest per cent move on record. However, this bullish impact was short lived as the Saudis announced a few days later that they were back online. Coal and Carbon traded relatively flat for the month of September.

The latest view on weather across Europe is nodding toward a fairly benign winter, at least for Q4 19, and this has added weight to prices out until the end of the year. Gas storage levels remain high across the Continent.