11th October 2023 Energy Price Alert – UK Gas & UK Electricity

Prices shot up on Tuesday as a result of the ongoing situation in the Middle East including Chevron being instructed to close an Israeli LNG field while hostilities continue.  Additionally there was a Norwegian outage and an explosion on a Finnish/Estonian gas pipeline, both of which would cause spikes in normal times.

This sort of volatility is common when a geo-political event takes place, of more concern is that it’s when we’re going in to winter so there could be a limit on how far prices drop back, and how quickly they drop back.  That said the weather is ridiculously warm at present and UK gas stocks are almost at 100% of winter forecast demand with multiple further LNG shipments presently due to dock this month.  The winter is forecast not to be as cold as usual so some further volatility could creep in if it gets colder than forecast.

Gas: Gas prices continued to rise yesterday, following from the conflict between Hamas and Israel. Israel closed its Tamar field and Balticonnector pipeline after a leak was discovered. An outage at Norway’s Kvitebjorn and a revised decrease in Renewable generation has provided additional bullishness to the market.

Power:  Power prices continued to rise yesterday, especially in the near-curve as contracts track the wider energy complex, namely Gas. Wind generation has been revised downwards for week 42, falling to 9.9GWs/day, which is back to seasonal norms. 

Crude: Oil prices eased yesterday as investors took their profits. The oil market is also awaiting updates from the EIA, OPEC+ and IEA due later this week, that will inform the direction of the market. 

Carbon (EU ETS): The ICE Dec-23 rose to €84.82/t yesterday. The market opened at €84.36/t today and is trading at €83.91/t at the time of writing. 

Carbon (UKAs): The ICE Dec-23 rose to £48.46/t yesterday, a near 10% gain. The contract has opened at £48.85/t and is trading at £47.58/t at the time of writing. 

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