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Weekly Wholesale Energy Market Report: Your Guide to UK Energy Markets - 24/07/2023

Your Weekly Guide to UK Energy Markets


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. As an energy brokerage company, we understand the importance of staying informed about the changing trends in the energy market. That's why we provide these weekly market reports, to help businesses like yours make informed decisions when negotiating your next energy contract.

 

Weekly Wholesale Energy Market Report: Gas & Power Markets


During the past week, the wholesale gas market in the UK experienced quite a bit of change due to various factors, mainly related to the state of key gas facilities in Norway. The market started the week on an uncertain note, with slight price increases driven by concerns about the operational status of these Norwegian gas facilities.


The Nyhamna gas processing plant, an important component in the supply chain, had been undergoing maintenance which, when completed, alleviated some of these supply fears. This led to a noticeable drop in prices, returning the market to a less volatile state. However, these reductions were short-lived as new concerns about future outages at other Norwegian facilities, such as the Vesterled pipeline and Kollsnes and Troll sites, emerged. These worries, coupled with unusually cold weather in the UK, led to increased gas demand and consequent price rises.


The week was also characterised by heightened gas consumption for electricity generation, as the output from renewable sources was not sufficient. Additionally, the cost of carbon rose during the week, which is significant as it influences the cost of fossil fuels, including gas. This served to apply further upward pressure on gas prices.


Towards the end of the week, prices began to soften again despite lower output from wind and solar sources. This was due to a comfortable level of gas inventories across Europe, including a well-advanced filling of German storages. The week closed with the market in a relatively comfortable position, despite the potential for further fluctuations due to scheduled maintenance on Norwegian facilities and ongoing concerns about the balance of supply and demand.


In summary, the week was a mixed bag with prices reacting to a blend of factors, mainly around supply uncertainty from Norway and changing demand patterns within the UK. This resulted in a volatile week with prices bouncing between gains and losses, underlining the sensitive nature of the gas market to such influencing factors.


Graph of the Last Week's Movements:


Let's take a visual look at the past week's gas and power market movements

weekly market movements

snapshot of market movements

Forecast


Looking ahead to the coming week in the wholesale gas and power market, it's crucial to keep in mind a few key factors.


Firstly, with upcoming maintenance planned for a number of significant Norwegian facilities, including the Vesterled pipeline and Kollsnes and Troll sites, we can expect some fluctuations in supply. This may have an upward influence on prices, particularly if there are any unforeseen issues that extend these periods of maintenance.


On the demand side, weather patterns will continue to be a significant influence. If the UK continues to experience cooler temperatures, this will likely lead to an increase in gas demand for heating purposes, thus pushing prices up.


However, we must also take into consideration the comfortingly high level of gas stores across Europe. If these remain high, they can act as a cushion to potential price rises by ensuring a steady supply even in the face of disruptions. This factor could help to stabilise prices in the week ahead.


Additionally, the construction of the new interconnector between Germany and the UK may start influencing the market, although the direct impacts might not be felt for some time.

Finally, external factors such as the cost of carbon, global political tensions, and changes in other energy markets can also cause unexpected shifts in gas prices.


To sum up, in the coming week, the gas market could be quite changeable with possible price increases due to maintenance of Norwegian facilities and weather-induced demand changes. However, high inventory levels and other external influences could mitigate these increases, leading to a potentially volatile but somewhat balanced week overall.

 

Table of the Movements on Each Day in the Last Week:


Here's a detailed breakdown of the daily changes in gas and electric prices over the past week:

DAY AHEAD PRICES

Gas (pence per therm)

Electric (£ per MWh)

17/07/2023

59.95

88.25

18/07/2023

66.00

81.50

19/07/2023

66.65

80.00

20/07/2023

67.70

78.00

21/07/2023

72.00

73.00

24/07/2023

72.50

80.50

WEEKLY AVERAGE

67.47

80.21

 

Weekly Wholesale Energy Market Report: Oil Markets


The global oil market also saw quite a bit of fluctuation this week. Brent crude and West Texas Intermediate (WTI), two of the key indicators of oil price, swayed back and forth due to a mixture of geopolitical tensions, economic growth prospects, and supply-demand balances.


The week kicked off with oil prices dropping off slightly after the preceding week's record gains. This was due to investors cashing in their profits and concerns about future demand for oil re-emerging. However, these prices still settled above $75 per barrel, showing the resilience of the market.


Following this, news from China about weaker than expected economic growth rattled the markets. As the second-largest oil consumer globally, any shifts in China's economy can significantly impact global oil prices. As a result, oil prices dipped again.


However, the market bounced back as China revealed plans to boost its domestic economy, which would likely increase its oil demand. Furthermore, expectations that the U.S. Federal Reserve would relax its monetary policy also helped drive prices up.



Despite this rally, prices again moved lower due to profit-taking by investors and a stronger U.S. dollar, which makes oil more expensive for those holding other currencies. This was counterbalanced somewhat by falling U.S. crude stockpiles.


By the end of the week, oil prices had increased slightly, buoyed by lower U.S. inventories and higher crude imports by China. However, concerns over weak demand kept these gains in check.


Forecast


In the week ahead, a few key factors could shape oil markets. Firstly, geopolitical tensions, particularly between Russia and Ukraine, could influence prices. If these escalate, they could disrupt supply and push prices up. Secondly, supply shortages could further boost prices if they materialise. Finally, any further moves from China to stimulate its economy could also impact global oil demand, and therefore prices.


Given these factors, we could see a continuation of the volatility experienced over the past week. As always, however, the situation will depend on how these various factors interact and evolve.


 

12-Month Graph to Show the Movements Over the Last Year


Now, let's zoom out and take a look at the long-term trends in the energy market over the past year:

12 month wholesale market movements

 

Stay Updated with Our Weekly Market Reports


By regularly checking our weekly market reports, you can stay updated on the latest trends in UK energy markets, gain insights into potential opportunities for savings, and make informed decisions on your next energy contract renewal.


 

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Are you ready to secure the best energy contract renewal for your business? Get in touch with us today to see what options are available for your next renewals. Click the button below to request your free quote, and discover how our expertise can enhance your business's energy strategy.


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