22nd May 2024 Energy Price Alert – UK Gas & UK Electricity

Wholesale Gas and Electricity prices rose markedly again on Tuesday.

The market’s explanation is a combination of low renewable generation and planned outages.

Historically when this has happened the market has rebalanced after a week or two. Assuming that this is the reason, and not geo-political factors, there is no reason to feel that the market won’t rebalance/reduce as we go in to the Summer.

Gas: Gas prices rose yesterday, following a combination of low renewable generation and planned outages at Gassco. This caused supplies to fall across Europe, and demand for gas fired generation to increase. The UK expects to receive three LNG cargoes for the remainder of May.
Power: Power prices shadowed upwards movement in the gas hub yesterday, with additional support for the further out curve coming from a bullish carbon market. Solar generation is forecast to produce 20% below norms this week, at 2.2GWs.
Oil: Oil prices extended losses yesterday, as the US Federal Reserve intend to keep interest rates high while they battle high inflation. The upcoming OPEC+ meeting on 1 June will discuss some members additional voluntary cuts.
Carbon (EU ETS): The ICE Dec-24 closed at €76.25/t yesterday, setting a new recent high. This morning, the contract is currently trading upwards at €77.08/t.
Carbon (UKAs): The ICE Dec-24 continued to gather upwards momentum yesterday, eventually settling at £43.33/t, the highest price since the start of the year. The contract has continued to strengthen so far this morning, trading at £43.89/t.

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