Gas and Electricity Year Ahead Wholesale costs are lower than those in last week’s report. They remain significantly lower than most of 2021 / 2022 / 2023 but are comparable to 2024. Oil is $66 a barrel, from $67.
The meetings between Presidents Trump and Putin in Alaska and in Washington between Trump, Zelensky and EU leaders, did not result in peace, but appear to have been constructive, which the energy markets have viewed as positive. Should the war end through an agreement between Russia and Ukraine, in the short term, it is not likely that more Russian Gas will flow through pipes into Europe, to help ease the tight supply margins. However, the potential for the removal of some global restrictions on the movement of Russian Oil and Gas, has seen prices fall. It is worth being very conscious of a market reaction if talks fail, specifically if Zelensky rejects a US backed solution.
EU Gas Storage levels have improved slightly and are now 74% full, up from 72% last week, but still well below last year’s 89%. Many countries now compete for LNG shipments, which means that additional demand due to regional heating or air cooling, can impact on us in the UK. If Storage levels have not improved significantly as we head into the winter, then forecasts for cold spells, will have an exaggerated influence on prices.
Gas is an expensive form of generation and so generally sets the direction for our Electricity Wholesale price. A lower Wind contribution over the last week at just 11% of supplies has meant that Gas provided 33%, far higher than recent weeks. Imports from Europe accounted for 22%, which includes Nuclear from France and Hydro from Norway.
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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