Headlines:
- Gas and Electricity Wholesale costs remain in the region of 20-month lows
- Colder temperatures are due and will increase heating demand
- EU Gas Storage is 70% full compared to 78% last year
Energy Overview
Gas and Electricity Year Ahead Wholesale costs are just slightly higher than last week. The downward trend stalled with some increases, but has now continued and prices remain in the region of 20-month lows. Oil has fallen further and is currently below $60 despite OPEC+ pausing a period of monthly production increases.
The status of EU Gas Storage remains a focus for price direction, although there appears to be less concern at the levels than in previous years, despite being just 70% full compared to 78% last year. Since Russia began to restrict supplies of Gas to Europe, prior to the invasion of Ukraine, Norway has been able to increase supplies. The need for Gas and a change in US energy policy has allowed them to invest and provide growing numbers of LNG shipments. These are set to continue with a further facility going live shortly. Russia is looking for alternate markets for its energy supplies, notably China, where they are piping Gas, which reduces some of China’s demand for LNG. With the hope that progress can still be made and a peace deal be put in place between Russia and Ukraine, this may ease the pressure on global energy markets, although the EU will probably continue to implement their ban on Russian Gas by 2028.
The last week saw another good contribution of Wind generation at 38% from 33%. This reduced the need for Gas at 24% from 28% and Imports were a stable 13%. Temperatures are forecast to be lower into January, which may add pressure to Gas and therefore also Electricity prices.
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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