Energy markets weekly: Mild weather delays winter pricing

Electricity consumption and spot prices both fell in the past week, likely reflecting a slow start (to put it mildly) to winter seasonality. Spot prices, however remain up on last year.

Gas prices are also up strongly compared to previous corresponding period (PCP) but probably not at the highest envisaged when the oil price was over A$100 a barrel. Renewable energy certificate prices remained and will remain high. Utility share prices were generally strong with a standout performance from Infigen, Origin and yield related stocks.

Consumption

Consumption was well down this week compared to PCP in all States except QLD. This likely reflects that the Winter seasonality is not happening so far this year. In QLD its likely that air conditioning demand is remaining higher than normal for the same reason, as well as the CSG base load uplift.

Futures

Futures prices continue to drift up, but arguably the more important point is that the shape of the futures curve points down. This basically is an expectation that over the next three years electricity prices are expected to fall. That said futures prices for many commodities are not generally very good predictions of what prices in the future will actually do!

Share prices

Another big week for IFN, ORG and APA have also done well over the past month. Oil prices are higher and interest rates lower. ORG’s share price tends to reflect the oil price and APA, as a growth stock with a good yield tends to be highly driven by 10 year bond yields.

David Leitch was a Utility Analyst for leading investment banks over the past 30 years. The views expressed are his own. Please note our new section, Energy Markets, which will include analysis from Leitch on the energy markets and broader energy issues. And also note our live generation widget, and the APVI solar contribution.