8th February 2024 Energy Price Alert – UK Gas & UK Electricity

As anticipated, prices continued to drop on Wednesday with Winter ’24 electricity now below £80/mWh and Winter ’24 gas nudging 80p/thm.

There’s still approximately a 20% premium over current spot prices but during the Summer curve we expect this to disappear.

Looking forward all one to five year prices, for both gas and electricity, are within a very tight price range. Electricity is £0.50/mWh and gas is 4.95p/thm.

With the continued above seasonal norm temperatures and excellent fundamentals for future deliveries of gas, we expect the pricing to remain subdued and further reductions are anticipated.

Gas: NBP prices fell yesterday. Prompt prices were pressured by news of increased wind generation over the next 2 days, the fall in price was capped, however, by concerns over the potential of further outages to Norwegian pipelines. Barrow gas treatment plant is expected back online today, following an unplanned outage, adding 6mcm/day capacity. 
Power: Power prices tracked underlying movements at the NBP hub yesterday, whilst falling carbon prices added constraint to the far curve. Next week is likely to see an increase in gas for power demand as wind output falls by over 20%. NG ESO have announced that they will allow 300MW of aggregated assets to participate in the balancing market – a further step towards the UK’s Net Zero ambitions.
Oil: Most Oil contracts gained yesterday on the back of strong demand outlook from the US. In a statement the EIA announced that they feel US oil production may be near its pinnacle, falling in Q3 2024. This added further bullish sentiment to the market.

Carbon (EU ETS): The ICE Dec-24 contract closed at €62.41/t yesterday. The contract is currently trading down at €61.90/t. 
Carbon (UKAs): The ICE Dec-24 continued to fall yesterday, closing at £34.76/t yesterday. This morning the contract is yet to trade.

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The Procurement Group

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