Gas and power fall despite rising oil
Oil prices increased month-on-month as concerns about intervention in Syria and conflict in the Middle East caused unease in the market. Month-ahead Brent crude oil rose 1.2% to a monthly average of $111.3/bl; the contract reached an eight month high of $115.3/bl on 9 September.Gas prices traditionally track the cost of oil – largely due to the impact of oil-indexed gas contracts. Therefore as oil prices rise it would usually be expected for gas to rise as well, and power to follow. However, in September annual gas and power prices fell, pushed down by other market drivers.
The benchmark annual gas contract fell 1% to a monthly average of 67.1p/th as gas consumption remained subdued through the month. At the same time gas production increased as scheduled maintenance at North Sea gas fields came to an end. Although gas and power prices are also linked (owing to the large amount of gas-fired generation on the UK system), the drop in power prices was partially offset by rising carbon and coal prices. The annual October 13 baseload power fell just 0.2% to £51.7/MWh in September.