Wholesale Gas and Electricity prices rose sharply on Thursday in response to GO political issues in the Middle East, where Iran is likely to retaliate against Israel, and Europe, where Russia took out an Ukrainian Energy Plant. Neither directly impacts gas production or supply, but the uncertainty caused by these actions has had a knock on effect to Global Markets.
Our expectation is that there will be more uncertainty until the Iran situation diffuses, and this uncertainty will almost inevitably lead to higher prices on the Wholesale markets in the short term. We would not recommend renewing contracts expiring after July but those expiring in April and May, even possibly June, should renew now.
On the generation front, renewables contributed almost 60% UK power generation in the past week and this has kept electricity prices well under control.
At the retail level, for clients with strong credit we are seeing prices below 19p/KWH for electricity.
Have a great weekend.
| Gas: Gas prices rose yesterday, after reports of Russian attacks on Ukrainian energy assets. Rising tensions between Israel and Iran have also impacted prices, with traders left unsettled as Iran highlighted their ability to close the strait of Hormuz. UK storage is currently around 38% full as we leave the winter period. Power: Power prices rose across the curve yesterday, following the gas markets in the near curve and carbon in the further out curve, as carbon climbed 5.5% in the session. Although, day ahead prices fell due to continued high wind generation of 16.2GWs/day, lessening the need for gas-fired power. Oil: US inflation has investors concerned about tighter monetary policy, which would increase the $USD, and lessen demand for oil due to the increased cost. The European Central Bank have suggested they could cut interest rates sooner than the US, as inflation is falling faster. Bullish sentiment is continued to be found within the ongoing conflict in the Middle East. Carbon (EU ETS): The ICE Dec-24 spiked to €68.3/t yesterday, a new three month high. This morning, the contract is currently trading up at €68.47/t after opening at €68.74/t. Carbon (UKAs): The ICE Dec-24 jumped to £37.2/t yesterday, reversing the previous week’s losses. The contract is currently trading at the same rate this morning. |
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