Headlines:
- Gas and Electricity Wholesale prices are higher than last week
- EU Gas Storage levels are 48% full compared to 67% last year
- Low Gas Storage levels are creating nervousness
Energy Overview
Gas and Electricity Year Ahead Wholesale costs are at their highest in over a year. Despite this, they are still significantly lower than most of 2021 / 2022 / 2023, which shows the potential for further increases. The Oil price is slightly lower, at $75.
EU Gas Storage remains the biggest influence, at just 48% full compared to 67% last year. Following the cancellation of the transit deal between Ukraine and Russia in January 2025, Gas supplies into Europe have reduced, placing more demand on stored supplies. This also means that there will be less surplus Gas available in the warmer months to refill Storage, to the 90% target by November, in readiness for winter 2025/26. Based on current Wholesale prices, any Gas directed to Storage will also be expensive, which may slow the process further. Temperatures have been forecast lower for the UK and parts of Europe, which will add more pressure to Gas supplies.
LNG deliveries remain high, being attracted to Europe by the price premium, but the unknowns surrounding US policy are creating some uncertainty. President Trump’s tariffs on Chinese goods have prompted retaliation, with a tariff against US LNG, making Chinese buyers likely to look for alternate sources. More importantly, the US may apply tariffs to their Gas exports to Europe, which depending on the scale, could result in large Wholesale prices increases.
Gas sets the price direction for the Electricity Wholesale cost due to its use for generation, which contributed 34% over the last week. Wind improved at 27% and imports through the interconnectors with the continent were 14%.
We would encourage customers that have Gas or Electricity contracts ending in the first half of 2025 and potentially further out, to discuss options with Indigo Swan and closely monitor the position.
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