Thursday 19th May 2022
- A number of factors are causing volatility for 2022 prices. 2023 and 2024 show better value.
- The invasion of Ukraine by Russia on the 24th of Feb continues to dominate Wholesale price direction.
- Peace talks appear to have stalled.
- The response has been for plans to reduce energy purchased from Russia.
- The consequence of this is that forecast energy costs are higher due to limited global resources.
- Gas Supplies through Ukraine have been interrupted due to troop activity
- On the 11th of May, Russia banned the use of the Yamal Gas pipeline through Poland in response to sanctions.
- Russian sanctions were also announced against German Gas imports.
- President Putin said Russia would require payment for their Gas in roubles, from “unfriendly countries”.
- Despite EU opposition to Russia’s payment request, it appears a number of companies intend to comply.
- Poland and Bulgaria have had their Gas supplies from Russia cut off as they refuse to pay in roubles.
- We wait to see if Russia cuts off more countries after the 20th of May payment deadline.
- European Union Gas Storage levels, which have a much higher capacity than the UK, are 41% full compared to 34% last year and 68% in 2020.
- EU ruling on levels of Gas Storage at sites, hitting 80% full by November 22 and 90% full by November 23, adding to demand and a price pressure.
- The reduced demand for LNG from China due to lockdowns, is allowing more deliveries to be made to the UK and exported to the EU.
- Increased European investment in LNG terminals to allow more deliveries from the likes of the US.
- Due to the amount of Gas the UK uses for generation, Electricity prices have followed Gas.
- The Oil price is high on the expectation of lower Russian exports.
- OPEC has said it would be “nearly impossible” to replace Russian Oil supplies.
- The US will release one million barrels of Oil a day from reserves, for six months to ease supply and price pressure.
Please note that the information included within this Daily Energy Market Insights are correct at the time of publishing.
