Oil prices fell month-on-month following news that sanctions on oil exports from Iran may be loosened following an agreement on the country’s nuclear programme. Sanctions currently prevent around 1mn b/d entering the market. But the falls were partially offset by concerns over supply security in Libya, which resulted in a rise in the price of oil towards the end of the month. The contract reached a near seven-week high of $111.4/bl on 27 November. Across the month it averaged $107.4/bl.
While gas is historically priced at a discount to oil, the fall in oil contract only limited gains in gas prices. The significant drop in temperatures in the UK and Europe saw rising demand push up the price of gas. The benchmark annual gas contract rose 0.9% to a monthly average of 67.1p/th.
Gas trends fed through into power, as the UK fuel mix for electricity comprises a significant proportion of gas-fired generation. Reduced nuclear and wind output supported the short-term rise, while uncertainties in future maintenance schedules pushed up long-term prices. The annual April 13 baseload power climbed 0.6% to average £52.43/MWh in November.
Changes in the price of coal, which is another feedstock for power generation, can also impact electricity prices. In November, coal prices dipped 0.9% to an average of $82.1/t, as a result of record levels of stocks in China following improvements to domestic transport networks. The fall in the cost of coal partially offset increases in power prices. But fears over potential supply disruptions of the fuel limited the falls.