Gas and Electricity Year Ahead Wholesale costs are lower than last week. They show good value compared to most of 2021 / 2022 / 2023, but are still more than double those in 2020. The Oil price is higher at $73.
The optimism within the energy markets continues, following a period of volatility. EU Gas Storage levels are considerably lower than the previous two years, at 77% full, but with LNG shipments heading back to Europe and milder temperatures forecast, it is hoped the high withdrawals will stabilise. Ukraine is refusing to renew the Gas transit agreement with Russia from January 2025, which will see flows into Europe reduced considerably. A number of nations are concerned as to the impact on them when the flows end and are looking for an extension to the deal or for another arrangement. There is still some hope that an imaginative solution emerges, potentially involving a third party. The US sanctions against Gazprombank threatened to prevent payment for Russian Gas, but it is being reported that a workaround has been found.
A low contribution of Wind to Electricity generation saw just 4% on the 12th of December, placing a further pressure on our Gas supplies, which averaged a very high 65% over a three-day period. In recent days Wind has picked up to in the region of 50%. Imports through the Interconnectors fell to 9%, from 14% in recent weeks. The forecast is that this winter will see an improved supply position compared to last year, aided if required by the Demand Flexibility Service (DFS).
Many of the issues which contributed to prices hitting the 2024 highs in November remain and demonstrates how finely balanced market sentiment is. We can see scenarios where prices move in either direction. Due to the risks, we would encourage customers that have Gas or Electricity contracts ending in 2024 and early 2025, to discuss options with Indigo Swan and closely monitor the position.
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