Gas and Electricity Year Ahead Wholesale costs are lower than last week. At in the region of 20-month lows, they remain significantly lower than most of 2021 / 2022 / 2023 and are comparable to just short periods of lower prices in 2024. Oil remains at $63 with OPEC+ pausing a period of monthly production increases.
EU Gas Storage levels have been a key price driver in recent years, with fears that there may be restrictions on supplies to consumers due to reduced flows from Russia. At 72% full, they are at their lowest since 2021, being an average of 88% over the previous three years. Despite this, there is a greater confidence, which is being reflected in prices for 2026, 2027, 2028, helped by the current milder temperatures, which have likely reduced withdrawals of Gas from Storage. Norway continues to be the main Gas supplier to Europe and large volumes of LNG are being delivered by the US, with more expected in 2026, with a new facility coming online. The EU plans to stop importing Russian LNG from January 2027 and all Gas by 2028, which could impact on prices as the deadlines approach. The prospect that a peace deal could be agreed by Russia and Ukraine is also lowering prices. Although Europe will probably resist renewing any kind of dependence on their Gas, a reduction of other measures could free up the movement of Gas and Oil on the global market, which will be reflected in our costs.
There was another good contribution of Wind generation over the last week at 33% of supplies, with Gas at 28% and 14% from the Interconnectors. Gas sets the direction for Electricity due to its high cost compared to other sources.
We would encourage those with Gas and Electricity contracts that are due to end in the next few months and possibly further out, to potentially take advantage of the competitive prices and to engage with Indigo Swan to monitor positions closely.
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