Happy New Year and welcome back. The festive season is often a quieter time for energy markets. This has certainly not been the case over the last month. Brent crude oil has continued its precipitous decline, falling another 15 $/bbl since early December to under 53 $/bbl, almost halving in value over the last three months. The shockwaves of this move are still feeding through into the global LNG and European gas markets. But there can be no doubt now that we are moving into a more structural period of hydrocarbon oversupply. This will have far reaching implications for LNG spot pricing & supply growth, oil-indexed gas contract prices, hub price dynamics and gas vs coal plant competitive balance. The commercial and market implications of this shift will be a key theme for this blog in 2015.
The other major event in European power markets over the last few weeks was the inaugural UK capacity market auction. There are some interesting lessons to be learned from the auction results, given a policy shift across Europe towards market based mechanisms to remunerate capacity. We will publish our first feature article on Monday 12th January which will explore the auction outcome and implications for wholesale energy market evolution.
In the meantime we wish our readers all the best for a prosperous 2015.