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 remains at $64.
The upward revision of temperatures has helped reduce energy costs as demand for heating is lower than expected. EU Gas Storage, although lower than last year at 83% full compared to 94%, has had just minor withdrawals. LNG deliveries into Europe have been high, as have contributions of piped Gas from Norway. The EU is banning Russian LNG from January 2027 and looking at restrictions on their piped supplies, most likely from 2028. LNG shipments from the likes of the US will be in high demand and the EU may at times enter competition with Asia.
Energy markets continue to factor in global risks such as the potential for increased assistance for Ukraine as Russia targets their energy infrastructure. A reduction in tensions in the Middle East has reduced the likelihood of disruptions to Gas and Oil from the region. The US and China appear to have found some agreement on trade which has reduced the chances of an impact on economies and the supply and demand of energy. The EU and US are targeting Russia and their trading partners, to pressure them to negotiate a peace deal with Ukraine.
Over the last week, the use of Gas for generation has increased from 17% to 34%, due to a reduction of Wind from 43% to 24%. Imports from the Interconnectors with Europe remained stable at 15%. The official outlook for UK Electricity supplies has improved this winter, with more Gas generation and Battery assets being available.
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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