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UK Monthly Energy Market Review: February 2024 Gas & Power Trends

Monthly Energy Market Overview: February 2024


February has been a month of notable shifts in the UK's energy markets. Contrary to the usual trend, the gas market witnessed a descent of 7.96%, marking a period of easing prices. In an intriguing twist, the electric market surged by 14.29%, signalling a robust demand that outpaced the general expectations for this time of year.


Monthly Wholesale Market Update banner showing a 0.90% increase in the Gas Market and a 23.44% decrease in the Electric Market, with the Smart En. Co. logo prominently displayed.

Gas Market Overview:


  • Initial Decrease: February began with a slight decrease in gas prices from the start of the month, showing a downward trend from 70.35p/th on 01/02/2024 to a month-low of 56.25p/th on 19/02/2024. This trend was influenced by a combination of milder weather forecasts across the UK and North Western Europe (NWE), strong wind generation, and robust supplies from LNG and UKCS.

  • Mid-Month Adjustments: Throughout the month, gas prices experienced volatility, responding to fluctuating demand, supply dynamics, and weather patterns. Despite the initial decrease, there were moments of price recoveries, driven by temporary cold snaps and supply concerns.

  • Increase Towards Month-End: As February progressed towards March, gas prices began to increase, closing at 64.75p/th by 01/03/2024. This rise can be attributed to expectations of colder weather and adjustments in the supply-demand balance, making gas more expensive for consumers and businesses towards the month's end.


Electricity Market Overview:


  • Beginning Stability: Electricity prices were stable at the beginning of February, with an opening price of £61.25/MWh. This stability was supported by effective wind generation and a balanced gas supply situation.

  • Fluctuations Throughout February: The electricity prices experienced several adjustments in response to wind generation variability and the interplay with gas price movements. A notable dip to £52.70/MWh on 21/02/2024 reflected periods of high renewable output and lower demand.

  • Price Increase as February Ends: Electricity prices saw an uptick, ending at £70.00/MWh on 01/03/2024. This late-month increase was primarily due to reduced wind generation and an uptick in demand, alongside rising gas prices, leading to higher electricity costs for end users.

snapshot of energy prices over the last month compared to last week and last year

Market Insights:


Gas Market: The overall decline in gas prices for much of February, followed by an end-of-month increase, highlights the market's sensitivity to weather-related demand shifts and supply variations.

Electricity Market: The electricity market's behaviour in February underscores the influence of renewable energy generation on prices, with the final increase reflecting greater dependence on gas-powered generation as wind output decreased.


Forecast for the UK Energy Market: March 2024


  • Gas Market: Continued attention will be on weather patterns affecting demand, LNG supply consistency, and the management of gas storages, with potential for price increases if cold weather persists. Electricity Market: Future electricity prices will likely depend on renewable generation levels and the gas market's influence, with an eye on how these factors combine to affect power generation costs.


February's market movements offer valuable lessons for consumers and businesses alike, stressing the importance of monitoring energy market trends for effective planning and cost management.


 

Energy Market Averages

DATE

GAS (pence per therm)

ELECTRIC (£ per MWh)

Last 7 Days

62.32

62.58

Last Month

63.86

61.60

Last Year

87.42

86.86

 

Last 12 month market movements


As we examine the broader trends, this graph provides a retrospective look at the last 12 months in the monthly energy market. It charts the day-ahead wholesale prices for gas and electricity, illustrating the volatility and trends that have shaped the market over the year.


graph to show last 12 months wholesale market movements
 

February 2024 Oil Market Overview


  • Early Month Developments: February saw oil prices decline amidst concerns over economic activity in China, the world's second-largest crude importer, and an unexpected increase in U.S. crude inventories. Prices were further pressured by geopolitical events and operational challenges, including tensions in the Middle East and a significant U.S. refinery shutdown due to a power outage. Brent crude and WTI crude futures both experienced notable drops in their value at the start of the month.

  • Mid-Month Price Movements: As the month progressed, oil prices fluctuated in response to a mix of geopolitical tensions, supply concerns, and changes in global demand forecasts. Notably, tensions in the Middle East, including the ongoing conflict between Israel and Hamas and attacks on shipping routes by Houthi forces, influenced market sentiment and contributed to price volatility. Meanwhile, OPEC's decision on extending production cuts and various supply and demand dynamics played a crucial role in shaping market trends.

  • End-of-Month Trends: Towards the end of February, oil prices experienced a mix of gains and losses, reflecting the complex interplay of factors influencing the global oil market. Concerns over global demand, particularly in light of economic indicators from the U.S. and potential impacts on interest rates, contrasted with supply tightness and geopolitical risks. The month concluded with a cautious market sentiment, with prices showing modest changes as traders weighed ongoing supply risks against broader economic and geopolitical developments.


Key Highlights:

  • Supply and Demand Dynamics: February's oil market was significantly impacted by shifts in supply and demand, influenced by economic activity, weather-related disruptions, and geopolitical tensions.

  • Geopolitical Tensions: Ongoing conflicts and tensions in key regions, including the Middle East, continued to pose risks to global oil supplies, contributing to market uncertainty.

  • Economic Indicators: Economic data, including manufacturing activity in China and job growth in the U.S., played a crucial role in shaping market expectations and influencing oil demand forecasts.


Looking Ahead: As we move forward, the oil market is likely to remain sensitive to geopolitical developments, supply adjustments by major producers, and global economic indicators. Investors and market participants will closely monitor these factors to gauge potential impacts on oil prices and market dynamics.


February's oil market dynamics underscore the complexity of global energy markets, where a wide range of factors can influence prices and trends. Understanding these dynamics is essential for market participants seeking to navigate the volatility and uncertainties inherent in the oil market.


 

Understanding the energy market can be complex, but it's crucial for making informed decisions about your energy needs. That's where we come in. At The Smart Energy Company, we're committed to helping you navigate the energy market with ease. Whether you're looking to renew your energy contract or switch providers, we're here to help.


Don't miss out on potential savings and better energy deals.




For more information or a detailed energy quote, contact us at 0151 459 3388. Let us empower your future with smarter energy solutions



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