This morning, the Electric wholesale (Day Ahead) prices have opened up 3.48% higher than this time last week with Gas (Day Ahead) increasing by 5.09&.
Some UK energy contracts reached fresh record highs due to momentum as bullish conditions developed. The planned maintenance on Nord Stream 1 that is scheduled to run from November 11 to November 21 was a major factor in price increases, but economists from Goldman Sachs to the IEA predict that it is "likely" that maintenance will last longer than predicted. Concerns about the EU's ability to reach its legislated gas storage goals are mounting. Levels will fall much below the 80 percent goal by the end of October if all flows from Nord Stream 1 are stopped for the remainder of the summer.
Strikes in France and Norway helped to boost gains as the cost-of-living problem and rising inflation fuel dissatisfaction. Despite increased competition for the resource, only four LNG tankers are scheduled to arrive in the UK in the coming two weeks, and the commodity ended the week at parity. While crude oil prices declined by 4% week over week, the price of coal increased 10% week over week as continued supply problems helped to moderate fears of a short-term recession.
Front-month UK gas contracts increased by 6%, while electricity contracts increased by 5%. Gains were more pronounced farther out, as the expected effects of the EU not meeting its storage ambitions rippled across the curve, pushing up annualised 12m gas and electricity contracts by over 20%.
This week's forecast is somewhat complicated. Any risk introduced to the already constrained European gas market would harm with Nord Stream 1 down. Even if the cost of extended NS1 maintenance should have already been included in, it's likely that any announcement endorsing this possibility will spark a sharp increase. Germany could reach 40 degrees Celsius by the end of this week due to a heat wave in continental Europe, which could lead Uniper to start removing gas from storage "quite soon."
Germany, on the other hand, has lobbied Canada to release the components required to restore Nord Stream 1 flows to capacity; Canada has been unable to do so as a result of sanctions imposed on Russia; Germany has offered to assume the part and bear the legal risk. The Canadian government announced that it will provide a "time-limited and revocable licence" to exempt the repatriation of turbines from the Russian sanctions after the Ukrainian government requested Canada to reconsider. The time it will take for the part to be returned is unknown, but the Kremlin has stated that once it receives the turbine, it would enhance supplies to Europe.
The UK energy market saw little deals due to the morning's slow start, but the Dutch TTF opened with a 4% discount, with Brent down 0.6 percent and Carbon up 1.28 percent.
How the market has opened each day:
Date Electric (£/MWh) Gas (p/therm)
04/07/2022 230.10 216.10
05/07/2022 217.10 271.10
06/07/2022 185.10 171.10
07/07/2022 235.10 226.10
08/07/2022 278.40 190.10
11/07/2022 238.10 227.10
7 day averages
Electric (£ per MWh) 230.65
Gas (pence per therm) 216.93
The below shows how the market compares to the previous week, month and year.
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