Below is our pricing report for the 21st October, to keep you updated with what is happening within the energy industry and the factors affecting the price of your contracts.
Overview
With the 31st of October deadline looming for Brexit, Boris Johnson has negotiated a deal to leave the European Union. In the news, the pound closed on a 5-month high against the dollar.
Though this might be good news, there are still several hurdles to cross. The first Parliamentary seating on a Saturday since 1982 was held at the weekend, where MP’s got the chance to vote, no deal was signed off and negotiations will continue this week on a third extension.
The deal also has to be approved by national and regional assemblies across the continent. One single veto could derail the agreement and the UK will have to apply for another extension for negotiation where the EU will be able to exert maximum leverage.
What Does This Mean for Energy Contract Prices?
Prices will be volatile, especially over the next few days and weeks as uncertainty continues to build as the deal has to be approved. Even if your contract is not up for renewal, contact us today to discuss your options. We are able to buy your energy in advance to secure rates that will not be affected by the future price rises.
Why?
If you would like to know what factors have affected the energy contract prices, please continue to read the report below for further information.
Gas and Power
Both Gas and Power contracts dropped in price last week, as the market weakened following the announcement of a Brexit deal. The UK also faces an influx of LNG (liquified natural gas) deliveries at the end of the month, helping drive down British wholesale gas prices.
Despite the pound trading higher against the Euro and US Dollar, his morning contract prices have continued to trade lower in price which is mainly due to Brent crude weakening over the weekend.
Crude
Brent crude traded lower on Thursday as data confirmed an increase in the US oil inventories. The report is taken once a week on a Wednesday by the EIA (Energy Information Administration). When oil stocks are low the need and demand for it are higher which results in a higher trade price and when there is a surplus of oil the trade price drops.
The prices have dropped back down slightly but are still trading higher than at the start of this month, Brent at 2.8% higher and WTI at 2.3%.
Current price standings:
Brent Crude = $59.00/bbl
WTI Crude = $53.63/bbl
Brexit
A new report from the Centre for European reform states Brexit has cost the UK economy almost £70 billion, the equivalent of £840 for every household in the country each year.
Last week a Brexit deal was agreed between with the European Union and MP’s got the chance to vote on Saturday with many parties expressing opposition to the deal, with Labour refusing outright to support it. After the session, the MP’s voted to do nothing, for now. Johnson sent an unsigned application to the EU to request another extension, but they are withholding their ruling until the MP’s have made a vote.
Even if a withdrawal agreement is reached this month, it will not end the threat of no deal. This means British businesses will face repeated periods of uncertainty about the potential for a sudden change in trading arrangements. It has to be ratified not only by Westminster and the European parliament but by national and regional assemblies across the continent. The risk of a single veto could crash the agreement and force the UK once more to extend negotiations or revert to unfavourable World Trade Organisation terms.
We are able to pre-buy energy in advance and secure fixed-term rates which will ensure your business isn’t affected by any sudden price rises related to Brexit. If you would like any more information, contact us today to talk about your options.
Oil Production
The pound remains steady at a multi-month high against the dollar and currently is balancing on a knife’s edge as we come into another week of decisive Brexit discussions.
The pound is currently trading at 1.16 against the Euro at the time of writing. Boris needs 320 votes for his deal to pass and some researchers have predicted if the deal fails to pass the pound can fall dramatically against the Euro. However, Danske Bank analysis suggests some, but not all, of the pounds recent gains will be unwound if the deal fails to pass through Parliament on Saturday.
Current Exchange Rate for 1 Pound Sterling:
Euro = 1.16
US Dollar = 1.30