Gas and Electricity Year Ahead Wholesale costs are higher than last week, although they still show good value. Oil is unchanged at $64.
Thursday and Friday of last week saw large increases to Gas and Electricity costs as a number of concerns created additional nervousness. EU Gas Storage levels have fallen further and are just 50% full compared to 61% last year. One forecast predicts that levels will be 25% by the end of the heating season, which is the same as 2022, when we saw extreme price volatility. There is a slightly different mentality now, as tight supply margins and lower Storage have become the norm, although there is the assumption that both Norwegian and US Gas supplies will continue without interruption. The announcement that the US will apply 10% tariffs from February and 25% from June to nations that are opposing President Trump’s ambitions to take ownership of Greenland, may raise a concern that their LNG could be used to apply pressure. Hopefully this will not evolve into a similar position as with Russian energy.
We have also seen price reactions to weather forecasts, with predictions across Europe for below average temperatures, moving energy prices higher, and then forecast adjustments easing costs.
The last week saw a lower contribution of Wind generation at 22% from 28%. This increased the need for Gas at 42% from 40%. Imports were higher at 14%.
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. Should you wish a monthly Price Projection for your energy contracts, please contact us to discuss.
If you enjoyed reading this blog, why not try one of our others:
