2nd September 2024 Energy Price Alert – UK Gas & UK Electricity
Other than November ’24, which saw a huge spike, wholesale Gas and Electricity prices were broadly stable or dropping on Friday.
The market fundamentals remain exceptionally strong and the reasons given for increases seem increasingly weak.
TPG believe that traders are having difficulty adapting to the new economy and are reacting to outages in the same way as they would have done 10 years ago when we had virtually no gas stocks in the UK. Presently we have over 90% of our projected Winter demand in storage, in the UK. Therefore any outages for a day or a week should have zero, or very limited, impact on the markets.
Gas: Gas prices were bullish at the close of last week due to the expected decline of renewables, leading to increased demand for gas. Maintenance periods for several gas terminals have also caused gas supplies to fall.
Power: Power prices took influence from the carbon market in the further out curve. However, wind generation is expected to decline to 5.7GWs/day in the near term, which is 20% below seasonal norms, and thus lead to more demand on gas for power production.
Oil: Oil prices corrected Thursday’s gains on Friday as news from OPEC+ reducing its 2.2million barrel/day output cut starting from October. This news outweighed Libya’s supply disruptions.
Carbon (EU ETS): The ICE Dec-24 fell to €70.03/t on Friday. This morning the contract has continued to soften and is currently trading at €69.72/t.
Carbon (UKAs): The ICE Dec-24 closed upwards at £43.31/t last Friday. The contract is currently trading at £42.61/t this morning.
