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Weekly Wholesale Energy Market Report 10/07/2023: Insights on UK Energy Markets

Your Weekly Wholesale Energy Market Report - 10/07/2023

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Welcome to The Smart Energy Company's Weekly Wholesale Energy Market Report , your go-to source for the latest insights and updates on UK energy markets.


We understand that keeping up with the changing trends in the energy market can be a daunting task for businesses, which is why we provide weekly market reports to help you stay informed. Our team of experts provides analysis on the latest updates on the energy market, including changes in supply and demand, natural gas prices, and renewable energy availability.


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Snapshot of market movements


snapshot of movements

Ga & Power Markets - Weekly Energy Report


Last week in the Gas & Power markets, there were notable developments and trends:


  1. Gas Prices: British wholesale gas prices saw fluctuations, with upward movement due to contracts changing on the monthly and quarterly levels. However, prices later retreated as the market weighed factors such as increased supply from Norway, storage levels, and muted demand.

  2. Power Prices: Power prices mirrored the volatility seen in gas prices, influenced by factors including gas price fluctuations, renewables generation, and weather conditions. Strong wind generation and moderate weather conditions impacted spot prices, while longer-term futures remained relatively stable.

  3. Supply and Demand Dynamics: The restart of Norwegian gas facilities and increasing Norwegian nominations had mixed effects on prices. While some price corrections were observed, overall market sentiment remained cautious due to concerns over supply disruptions and muted industrial demand.

  4. Impact of Renewables: Good renewables generation, particularly wind generation, played a significant role in shaping price movements in both gas and power markets. High wind output mitigated some price increases, while reduced wind forecasts impacted spot prices.

  5. Storage Levels: Storage levels in the UK remained a factor influencing gas prices. Rising storage levels contributed to bearish pressure and offset some of the bullish sentiments in the market.

  6. Technical Corrections: Technical buying and adjustments occurred in response to market conditions, resulting in some price fluctuations and corrections throughout the week.

In summary, the Gas & Power markets exhibited volatility and fluctuations during the week, influenced by factors such as supply disruptions, storage levels, renewables generation, and weather conditions. While some upward and downward movements were observed, overall market sentiment remained cautious. Monitoring supply and demand dynamics, storage levels, renewable generation, and geopolitical developments will continue to be important for understanding future market trends in the Gas & Power markets.


Forecast


Things to Look Out for Which May Affect Prices in the Gas & Power Markets This Week:

  • Supply dynamics, including developments in Norwegian gas facilities and potential supply disruptions, can impact gas prices. Changes in storage levels and supply availability will be crucial to monitor.

  • Demand levels, influenced by factors such as weather forecasts, industrial activity, and consumer behaviour, can affect both gas and power prices. Any significant shifts in demand patterns may influence market dynamics.

  • Renewable generation output, particularly wind and solar, can impact power prices. Monitoring changes in renewables generation will be important to understand the supply-demand balance.

  • Market sentiment and investor confidence may influence pricing. Keep an eye on factors such as global economic growth expectations and geopolitical tensions, as they can impact market sentiment.

  • Regulatory updates and policy announcements that affect the gas and power sectors can have price implications. Stay informed about any changes in subsidies, emissions targets, or energy policies.

Summary: This week, it will be important to monitor the supply dynamics, demand levels, and renewable generation output in the Gas & Power markets. Additionally, keeping an eye on market sentiment, regulatory updates, and global economic factors will be crucial. These factors have the potential to influence gas and power prices. Stay informed and closely monitor market news and updates for a better understanding of the market dynamics.


Oil Markets - Weekly Energy Report


  1. Price Movements: Brent crude posted marginal gains, settling higher after four consecutive quarters with a net loss. Concerns over slowing global economic activity and potential interest rate hikes weighed on prices.

  2. Supply Cuts Extension: Saudi Arabia and Russia announced an extension of production cuts through August in an effort to support oil prices. This decision, along with previous supply cuts, is expected to reduce global oil output by around 5%.

  3. Market Sentiment: Investors weighed the supply cut extension against the bleak global economic outlook, resulting in mixed market sentiment.

  4. Sideways Trading: Oil prices showed rangebound behavior throughout the week, with marginal upward movement and continued attachment to the $75 mark for Brent crude futures.

  5. Equities Performance: Equity markets experienced sideways movement and marginal gains/flat trading as investors assessed the impact of economic slowdown concerns and impending interest rate hikes.

  6. Technical Factors: Supply fears and technical trading influenced oil prices, countering bearish factors such as poor economic growth and muted demand.

In summary, the oil market displayed a mixed picture during the week, with upward movement influenced by supply cut extensions and technical factors. Concerns over economic growth, muted demand, and potential interest rate hikes remained as bearish influences. Monitoring supply dynamics, global economic trends, geopolitical developments, and market sentiment will be crucial in understanding future oil price movements.


Forecast


Things to Look Out for Which May Affect Prices in the Oil Markets This Week:

  • Supply and demand dynamics will be important to monitor, particularly any updates on production levels or changes in global oil inventories. Supply disruptions, geopolitical tensions, and changes in demand patterns can significantly impact oil prices.

  • Keep an eye on global economic indicators and developments that may influence oil prices. Economic growth expectations, interest rate decisions, and geopolitical events can affect overall market sentiment and oil demand.

  • Pay attention to any announcements or actions from major oil-producing countries, OPEC, and non-OPEC members regarding production levels and supply agreements. These can have a significant impact on oil prices.

  • Monitor geopolitical developments, as conflicts or tensions in major oil-producing regions can disrupt supply and impact prices. Stay informed about any updates regarding trade disputes or sanctions that may affect oil markets.

  • Stay updated on global energy policies, including any changes in regulations, subsidies, or taxes that may affect the oil markets. These policy shifts can influence market sentiment and demand for oil.

Summary: This week, keep a close watch on the supply and demand dynamics, global economic indicators, and geopolitical events that may impact oil prices. Stay informed about production levels, inventories, and announcements from major oil-producing countries. Additionally, monitor global energy policies and geopolitical developments that could affect oil markets. These factors will help provide insights into the potential direction of oil prices in the coming week. Stay updated on market news and developments for a comprehensive understanding of the oil market dynamics.


 

Jargon Buster

  • Bearish - In relation to energy markets, bearish means that there is an expectation of a decrease in the demand for energy products, or an increase in the supply of energy products, which would result in a decrease in the price of energy products. This could be due to a variety of factors such as a slower economic growth, overproduction of oil and gas, or the emergence of alternative sources of energy. A bearish outlook for energy markets suggests that companies operating in the industry may struggle to maintain profits and may be forced to cut costs or reduce production.


  • Bullish - In relation to energy markets, bullish means that there is an expectation of an increase in demand for energy products, or a decrease in the supply of energy products, which would result in an increase in the price of energy products. This could be due to various reasons such as a growing global economy, production cuts by major oil-producing countries, geopolitical tensions that impact the supply, or a shift towards renewable energy sources. A bullish outlook for energy markets suggests that companies operating in the industry may see increased profits and may be able to invest in new projects to meet the growing demand for energy products.

How the market has opened each day:

DAY AHEAD PRICES

Gas (pence per therm)

Electric (£ per MWh)

03/07/2023

83.99

92.00

04/07/2023

85.73

85.75

05/07/2023

84.00

91.00

06/07/2023

78.50

82.25

07/07/2023

81.70

87.00

10/07/2023

79.90

87.00


7 day averages


Gas (pence per therm) 82.30

Electric (£ per MWh) 87.50


 

Last 12 months wholesale market movements

12 month market movements

 


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