Gas and Electricity Year Ahead Wholesale costs are lower than last week. They remain significantly lower than most of 2021 / 2022 / 2023 but are comparable to 2024. Oil is $62 a barrel from $64.
The ongoing developments regarding discussions for a peace deal between Russia and Ukraine have helped ease energy prices. An end to the war would likely eventually see some reductions of the global restrictions on the movement of energy. Europe would probably be reluctant to roll back measures, but the appeal of more Gas and lower prices may be too hard to resist.
A colder spell has seen EU Gas Storage levels fall to 78% full compared to 88% last year. However, milder temperatures are forecast which will hopefully slow the withdrawals and continue the more positive view on Storage, both for 2025 and 2026. Europe has seen large volumes of LNG shipments and with more supplies becoming available and little competition for shipments, these should continue to help support the higher winter demand.
Over the last week, the demand for Electricity increased as would be expected due to the lower temperatures and darker evenings. The contribution of Wind to generation fell from 36% to 29%, which meant an increased demand for Gas at 35% from 25%. The Interconnectors with Europe provided a lower 10%.
Prices are low compared to most of 2025, due to the more optimistic outlook for a number of issues. Should a peace deal be put in place, then we may find that prices fall further. However, failure may see a rebound, especially in the event of any further pressures on supply and demand. 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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