7th October 2024 Energy Price Alert – UK Gas & UK Electricity
Wholesale Gas and Electricity prices continued to rise on Friday, as a response to the increased tensions in the Middle East.
We expect this to abate over a 2 to 3 week period once/if Israel tax Iran. 2-3 weeks is the normal time for the market to settle after an event such as this.
That said, there is no commercial reason for Gas and Electricity prices to rise as a result of this conflict. The oil price is rising significantly due to Iran’s production of oil, but we take no LNG from Iran and ships have been rerouted away from the Suez Canal for some months.
Gas: Gas prices rose at the conclusion of last week following rising tensions in the Middle East with new developments supporting market volatility. Although, fundamentals suggest that the UK is well supplied and demand is performing as expected for this time of year.
Power: Power prices tracked the wider energy complex on Friday. Gains in the gas and oil markets supported power prices, however, carbon declines limited prices from rising further.
Oil: Oil prices continued to climb at the end of last week. Rising freight costs due to Hurricane fears and widening conflict in the Middle East threatening to disrupt oil supplies lead the market into a weekly gain.
Carbon (EU ETS): The ICE Dec-24 fell to €62.05/t at the end of last week. The contract is currently trading softer at €61.15/t.
Carbon (UKAs): The ICE Dec-24 fell to £36.00/t on Friday. The contract opened at £35.7/t this morning and is currently trading at £35.96/t at the time of writing.