Since our last Energy Report, Gas and Electricity Year Ahead Wholesale prices are lower.
The supply position continues to be positive, with large numbers of LNG deliveries still being made to Europe, supporting Gas Storage levels, which are unchanged from last week at 56% full. The target of 90% by November 2023, will require supplies to be diverted to Storage during warmer periods, so the reduction in heating demand will not necessarily mean a surplus of Gas and lower prices. Potentially we may see some LNG shipments head towards Asia, as the Chinese economy grows. With large volumes of Russian Gas no longer going to Europe, they have been supplying more to China, which may reduce their need for LNG.
Industrial action in France is impacting on their receipt of LNG and also on Nuclear generation. The new issues with their reactors highlighted on the 10th of March, threaten to impact on Exports to the UK when our supply margins are tight. This may mean that measures put in place for additional expensive generation are required, although hopefully will not be the case with milder weather forecast. The contribution of Wind over the last week has been 27% from 28% the week before.
Although Wholesale prices show some daily volatility, the general trend since the start of the year has been downward and they are considerably lower than the levels seen in 2022. There remains a premium on the very low prices seen in 2020 and early 2021, but with the possibility of an exaggerated market reaction to any events impacting on supplies, we would advise discussing your options for contracts ending in 2023 with Indigo Swan.
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