The outlook for prices in the UK’s energy market will largely depend on the direction the economic situation in the Eurozone takes in the coming weeks, says npower.
“Despite a lot of bearish news during recent weeks, last week saw a reversal of prices for underlying fuels. The renewed strength was driven by concerns around tensions in the Middle East as well as a coordinated effort by the leading central bank to pump liquidity back into the global economy," said npower's Magali Hodgson. “Front month Brent oil prices closed the week around US$110/bbl, more than US$3 higher than it closed the previous Friday. Coal also saw rises, with 2012 API#2 coal ending the week nearly US$4/tonne higher than it began. In the last two weeks coal’s share of the stack has been twice that of gas generation. And, in fact, so far this winter coal has been generating more than gas by an average of 10%.
The outlook in the short term is set to remain bearish, she predicts. "A close eye should still be kept on the weather," Hodgson explained, "But, the longer it takes for cold weather to hit the UK, the lesser the impact it will have on prices. In terms of macroeconomic influencers, this fortnight is paramount to find out the progress of the Eurozone issues, with an EU leaders’ meeting scheduled this week and an OPEC meeting next week providing some market direction.”
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