Headlines:
- Gas and Electricity Wholesale prices are higher than last week
- Trade tariffs are being lowered, which could increase energy costs
- EU Gas Storage remains very low
Energy Overview
Gas and Electricity Year Ahead Wholesale costs are higher than in last week’s report but significantly lower than most of 2021 / 2022 / 2023, although still higher than 2020. The Oil price is $65 from $62.
EU Gas Storage is just 43% full compared to 65% last year. The warmer weather both here and in Europe should allow an opportunity to further add supplies. The EU is likely to sign off the reduction of their Gas Storage targets, which currently have interim requirements and a need for them to be 90% full by November. The relaxation of these, to allow some flexibility in the buying of Gas for Storage, may relieve a price pressure. The EU has also announced its intention to stop using Russian Gas by the end of 2027, which will be challenging, but achieved through efficiencies, more renewables and increased LNG shipments.
Tariffs by the US which have either been applied or delayed, have reduced energy costs since the initial announcement in April. The largest of these were against China, who retaliated with their own measures. Both parties have now significantly reduced them for 90 days, likely increasing confidence in trade and in turn projections for energy requirements.
Wind’s contribution to generation over the last week was 14% from 18%. Gas, which generally sets the direction for Electricity, provided 28% from 27%. Imports from Europe via the Interconnectors were unchanged at 20%.
It is not clear how a number of factors will influence prices, which include peace talks, Gas 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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