Headlines:
- Gas and Electricity Wholesale prices are slightly higher than last week
- EU Gas Storage levels are a high 72% full
- Global events may still create price volatility
Energy Overview
Gas and Electricity Wholesale costs are slightly higher than last week.
Qatar advised its European customers that there would be delays to LNG deliveries due to ships avoiding the Red Sea and the longer journey times. Although their LNG production levels remain unchanged, the news was enough to cause a small price spike. An Oil tanker caught fire following an attack by Houthi rebels, increasing security concerns. On Friday the US said they would review the plans for new LNG export projects, to consider the impact on domestic energy costs and carbon emissions. The global demand for LNG is increasing, especially from most European nations, as they look to replace lower imports from Russia. Any restrictions on new capacity will add pressure to existing supplies. And finally, the attack on the US military base in Jordan over the weekend, with the possible link to Iran, has increased tensions in the region and the concern that Oil and LNG supplies could be affected.
High EU Gas Storage levels at 72% full and milder temperatures reducing heating demand, have meant that the above had less of an impact on energy prices. We have also seen a very high Wind contribution to generation over the last week at 36% and low Gas at 24%, compared to 40% the previous week. Electricity Imports from the continent were a very high 15% of supplies, with significant volumes from Norway, France, Belgium and Denmark.
There is a Wholesale price premium when compared to before Russia reduced Gas flows to Europe, but they are at their lowest in over two years. The conflict in the Middle East has the potential to create supply issues for winter 2024/25, making this a good time to consider 2024 contracts or at least monitor them closely.
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