Gas and Electricity Year Ahead Wholesale costs are similar to last week. They remain significantly lower than most of 2021 / 2022 / 2023 but are comparable to 2024. Oil has fallen to $67 a barrel as OPEC+ is likely to further increase production.
The US and the EU are looking to apply more pressure to Russia and potentially its trading partners, in order to force them to engage in the peace process with Ukraine. This may see the planned EU restrictions on Gas imports brought forward from the end of 2027 to 2026. Russia is looking at other markets, such as China, who have approved the construction of another Gas pipeline and are receiving LNG shipments. The US and Israel have agreed a Gaza peace plan, which if accepted by Hamas could reduce a price pressure. Any measures which impact on the movement of Gas and Oil are likely to influence energy costs.
October is the official start of the heating season, when Gas is more likely to be withdrawn from Storage, although last year, the EU was still adding to Storage until late October. Levels are still low at 83% full compared to 94% in 2024, so if there is a prolonged period of below average temperatures, then prices may increase as Europe competes with Asia for LNG shipments.
Wind’s contribution to generation fell to just 18% over the last week, from 37%. This increased the use of Gas at 34% and Imports via the Interconnectors at 19%.
We would encourage those with energy contracts ending in the next few months and potentially further out, to engage with Indigo Swan and monitor positions closely.
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