The energy markets reached record lows on the far curve in July, providing optimum opportunities for Amber to hedge client positions. Gas contracts fell of by around 5% on the curve as Chinese demand dropped, dampening global economic sentiment.
The worlds second largest consumer also revealed plans to export mass quantities of refined fuels, adding to the current supply glut and weighing on prices further.
Sanctions were also lifted on Iran after an agreement was reached surrounding the nations nuclear programme which resulted in immediate crude oil shipments to the far East, lowering the global price benchmark of crude oil.
The Greek bailout weighed on pricing as the euro weakened vs the dollar and the sterling. However a solution was reached between investors and Greece, preventing further losses, although the market is looking like it may take some time to recover.
The Chinese stock market also crashed, at the start of the period, and with weakened manufacturing data in the Far East, contracts fell off further.
Gas flows from Norway to the UK remained strong and with consistent wind and nuclear power generation levels, both gas and power showed little volatility on the prompt. Prices for immediate delivery remained relatively static though the month as relatively low demand failed to test the U.K. generation mix.
Consistently high levels of wind & nuclear power generation coupled with plummeting coal prices kept the Day Ahead contract firmly around the £40/MWh mark (4p/kWh).
The gas and power markets also entered a period of backwardation; for example when the future cost of electricity for delivery in 2017 is cheaper than the cost in 2016.
The month finished in a firm bearish trend, with little hint of any upside being posted in August.