Current energy prices compared to last year.

What happened in the market place this week?

Energy contracts have dipped slightly this week, with volatile trading in the European carbon markets, spikes of coronavirus in Asia and more supplies entering the UK widening the supply margins as wind generation increases reducing the reliance on burning fossil for fuel.

The US and Iran have also been working towards ending trade sanctions, which could see an increase in global oil supplies if Iran is able to trade in the open market and stall the current oil price rally.

However, compared to this time last year, energy prices are still increasingly more expensive, with electricity prices over 60% higher than this time in 2020 and gas contracts have increased in price by 77%.

Lockdown restrictions have lifted in the UK, with pubs reopened and people being allowed inside each other's houses and free to hug again. Cases have been falling in the US too, which has kept contract prices steady despite the ongoing crisis in India and growing uncertainty around global oil demand recovering as hoped.

 Bullish Factors (upward pressure):

• The US and Iran working towards ending trade sanctions.
• Coronavirus spikes and new lockdown restrictions in countries including Singapore and Japan.
• Easing of lockdown measures throughout Europe.
• Falling number of coronavirus cases in the US.
• Reopening of a US fuel pipeline that had to close due to a cybersecurity attack.
• Increased hopes of increasing global oil demand, keeping crude oil prices steady.

Bearish Factors (downward pressure):

• Volatile European carbon markets.
• Energy supply margins widening as the UK receives more gas supplies from Norway.
• Increase in wind generation, reducing reliance on fossil fuels. 
• Inflation growing in US, which could lead to interest rates rising.

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