Headlines:
- Russia has demanded that Gas be paid for in roubles
- Deliveries to Poland and Bulgaria have been suspended due to their refusal
- The EU’s Gas Storage levels are slightly higher at 32% full
Energy Overview
Since our last Energy Report, Gas and Electricity Wholesale prices are slightly higher.
Wholesale costs for 2022 remain very high, although considerably lower than the peaks we saw in March. Prices for contracts starting in 2023 and 2024 show much better value, which provides an opportunity to contract longer and reduce the shorter term % increases.
The invasion of Ukraine by Russian forces on the 24th of February continues to dominate price direction for Oil, Gas and Electricity. The concern is that Russia will cut off Gas supplies to Europe in response to sanctions, something they have been reluctant to do, due to the revenue it provides. However, on the 26th of April they suspended deliveries to Poland and Bulgaria as they refused to pay for Gas in roubles. Other countries are likely to take the same position. The EU’s Gas storage levels have improved at 32% full, comparable to 2021 but significantly lower than the 60% in 2020. To avoid issues, the EU has set storage targets, to ensure there are sufficient supplies for this winter.
Electricity prices have followed Gas higher due to 40% of our generation coming from Gas, so far in April. Wind’s contribution continues to be very erratic, although at 22%, is above the 19% yearly average. The Met Office forecast for the coming week, suggests temperatures will dip below seasonal norm, adding to Gas heating demand.
We would advise looking at your options for contracts ending in Q3 and monitoring the remainder of 2022, having conversations with your contact at Indigo Swan about your specific requirements.
