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

Monthly Energy Market Overview: May 2024


May 2024 experienced significant shifts in gas and electricity prices driven by a mix of supply dynamics, weather patterns, and geopolitical influences. The month saw varied price movements due to maintenance activities, demand fluctuations, and international events.

graphic to show the percentage difference over the last month in wholesale energy prices

Key Events and Trends:


Early Month Supply Dynamics (1st to 3rd May):


  • Gas Prices: Prices rose initially due to lower import levels from the North Sea pipeline, which dropped to 17.9 mcm/day, the lowest since August last year. This increase in demand led to a rise in gas prices to 70.50p per therm by the 1st of May.

  • Electricity Prices: Followed gas price trends, starting at 61.50 £/MWh on the 1st of May, influenced by decreased wind generation and increased reliance on gas-fired power.


Mid-Month Market Fluctuations (7th to 17th May):


  • Gas Prices: Prices fluctuated due to varying Norwegian supply and maintenance activities. NBP Day-Ahead (DA) prices peaked at 79.00p per therm on the 17th May, driven by increased gas-for-power demand and lower wind speeds.

  • Electricity Prices: Mirrored gas price movements, with prices reaching 78.50 £/MWh on the 17th May due to lower renewable output and higher gas-fired power generation.

Late Month Adjustments (20th to 31st May):


  • Gas Prices: Prices saw a steady increase towards the end of the month, reaching 83.50p per therm by the 31st May, driven by geopolitical tensions, particularly the potential delay in LNG exports from Texas, and ongoing maintenance in Norway.

  • Electricity Prices: Similarly increased, closing at 75.00 £/MWh on the 31st May, influenced by lower wind speeds and higher gas-for-power demand.


 

A Picture Worth a Thousand Words


In May 2024, gas prices opened at 70.50p per therm and closed at 83.50p per therm, reflecting an increase of 13.00p. Electricity prices started at 61.50 £/MWh and ended at 75.00 £/MWh, reflecting an increase of 13.50 £/MWh. On average, gas prices stood at approximately 76.24p per therm, while electricity prices averaged around 73.04 £/MWh for the month. These price movements underscore the impact of supply dynamics, demand fluctuations, and broader geopolitical events, highlighting the importance of strategic energy management to navigate such volatility.


graph to show the wholesale market movements through the month of May 2024

Understanding Market Dynamics Over Time:

To further understand how the energy market has evolved, the infographic below compares current prices to historical data. On the 1st of June 2024, electricity prices are noted at 72.50.00 £/MWh and gas prices at 83.00p per therm. This snapshot provides a clear comparison against price movements from the previous day, week, month, and year.


Notably, electricity prices have increased by 6.62% compared to the same time last year, reflecting broader market trends and possibly increased supply or reduced demand. In contrast, gas prices have increased by 50.21% over the same period, highlighting different factors influencing the gas market. These comparisons are crucial for businesses looking to forecast future costs and budget effectively, especially in a volatile market.

Energy Market Averages

DATE

GAS (pence per therm)

ELECTRIC (£ per MWh)

Last 7 Days

82.65

73.45

Last Month

77.30

73.14

Last Year

81.38

78.65

Forecast for June 2024: 

Looking ahead, we anticipate a general stabilisation of prices, with potential for slight decreases as temperatures warm up and maintenance issues resolve. However, geopolitical tensions remain a wildcard that could affect market dynamics.


 

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.


 

Oil Market Summary for May 2024:


The oil market in May 2024 exhibited notable volatility influenced by geopolitical events, economic indicators, and supply-demand dynamics. Here is a detailed overview of the key trends and price movements throughout the month:


Starting Price and Ending Price:


  • Brent Crude: Opened the month at $87.48 per barrel and closed at $81.86 per barrel.

  • WTI Crude: Began at $83.17 per barrel and ended at $77.91 per barrel.


Highest and Lowest Prices:


  • Brent Crude: Reached its monthly high at $83.88 per barrel and dipped to a low of $81.36 per barrel.

  • WTI Crude: Peaked at $79.26 per barrel and had its lowest at $76.87 per barrel.


Significant Changes:


  • 1st to 3rd May: Prices fell initially due to the expiration of the June contract and potential interest rate hikes by the US Federal Reserve, which could impact the economy and USD value. Ongoing conflicts in the Middle East, particularly between Israel and Hamas, provided some support to prices. Brent closed at $83.85 per barrel on 3rd May, while WTI closed at $79.11 per barrel.

  • 7th to 17th May: Prices fluctuated due to various factors including weak US jobs data, potential interest rate cuts, and fluctuating Middle Eastern ceasefire negotiations. Brent settled at $83.33 per barrel on 7th May and saw a high of $83.88 per barrel on 10th May before falling to $82.79 per barrel on 13th May.

  • 20th to 31st May: Prices saw some recovery driven by positive economic indicators from China and the US, anticipation of OPEC+ maintaining supply cuts, and seasonal demand increases. However, concerns about US fuel demand and potential prolonged high interest rates led to declines towards the end of the month. Brent closed at $81.86 per barrel on 31st May, while WTI settled at $77.91 per barrel.


Average Prices for the Month:


  • Brent Crude: Approximately $83.50 per barrel.

  • WTI Crude: Around $78.95 per barrel.

Commentary:

May 2024 was marked by significant fluctuations in oil prices, driven by a combination of geopolitical tensions, particularly in the Middle East, and economic indicators from major economies like the US and China. The influence of OPEC+ decisions, especially regarding production cuts, also played a critical role in shaping market dynamics. The month saw a mix of bullish and bearish factors, with price movements reflecting the complex interplay between supply concerns, demand signals, and broader economic trends.


 

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.


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