This week, UK Gas prices have fallen sharply due to a glut of supply flooding the market, leading to over-supply. As over 50% of the UK’s electricity generation is powered by gas, the price of electricity has fallen accordingly.
UK Energy prices have resisted the influence of increasing oil prices, which rose steadily throughout the week to $63.49 at the time of writing – up from around $62 the previous week as OPEC finalise their decision to cut production by an additional 500,000 barrels per day (b/d) through to the end of March 2020. A decision was expected to be announced yesterday but with Thursday’s discussions overrunning ministers left without any details of a ratified deal being announced.
The question we’re all pondering however is “how long will this reduction in prices last?”
OPEC’s cuts have been much larger than industry experts had predicted, which will likely further increase the price of oil. Coupled with the UK’s current period of political instability as we approach the General Election, it’s expected that we’ll see a marked impact on the volatility of energy prices.
Furthermore, weather forecasts predict that in election week, the UK will face a cold snap that could see the arrival of snow across much of the UK. Come voting day, the first December general election since 1923, a sharp drop in temperature could signal the start of the UK’s energy wholesale prices beginning to rise.
Whatever happens, we’re certain to be in for a bumpy ride as the trinity of issues: OPEC cuts, the election and poor weather; simultaneously impact the UK’s energy market.
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