Gas Year Ahead Wholesale costs are lower and Electricity costs are slightly higher than in last week’s report, but both are significantly lower than most of 2021 / 2022 / 2023 and still higher than 2020. The Oil price is $65 from $64.
The constantly changing tariffs have continued to impact on business confidence and increase the likelihood of a slow down of the global economy. As a result, less demand is being forecast for Gas, Electricity and Oil, whilst OPEC+ has also increased Oil production, beyond expectations. Tariffs on many countries, including those in the EU, have been reduced, but the world’s biggest economies, the US and China, continue to apply very high rates.
EU Gas Storage levels are still a big influence on energy prices, as they remain very low at just 36% full, compared to 62% last year. Injections have started, in an attempt to reach the interim targets and be 90% full by November, but very little progress is being made. A proposal to allow some refilling flexibility is looking likely to be accepted, which would reduce the need to buy Gas for Storage when conditions are not favourable. The hope for a resumption of Russian Gas flows through Ukraine this year is fading, which may start adding more pressure to Gas prices as we get closer to the winter and the higher heating demand.
The last week saw a reduced Wind contribution to generation at 15%, down from 28%, which meant Gas was a higher 29%. Imports from Europe via the Interconnectors were also up at 20%.
It is not clear how a number of factors will influence prices, which include peace talks, storage levels and tariffs. We would encourage those with Gas and Electricity contracts that are due to end in the next few months and potentially further out, to engage with Indigo Swan and monitor positions closely.
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