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Weekly Wholesale Energy Market Update - UK Energy & Oil Markets - 11/12/2023

Did you know the UK energy market saw noteworthy changes last week? Understanding these trends is crucial for making informed business decisions. Let's delve into what these developments mean for your business.


Infographic displaying Weekly Wholesale Market Update for the period 20/11/2023 to 27/11/2023 with a 8.35% decrease in the Gas Market and a 16.71% Decrease in the Electric Market, featuring upward arrows and the logo of Smart En. Co.

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 Gas and Power Market Review: 04/12/2023 - 11/12/2023


Gas Market Overview:

  • Start of the Week: The gas market opened at 98.20 p/th on 04/12/2023. The UK's coldest conditions thus far this winter initially pushed the prices up slightly.

  • Midweek Trends: Prices fell to 94.60 p/th by 05/12/2023, influenced by milder and windier weather, which reduced the demand for heating and power generation. On 06/12/2023, the market continued its downward trend, closing at 95.00 p/th, due to decreased demand and healthy supplies.

  • End of the Week: Prices briefly surged to 96.50 p/th on 07/12/2023 but then settled at 94.25 p/th on 08/12/2023, primarily due to an outage at a gas plant in Shetland. Despite warmer temperatures indicating a bearish trend, supply disruptions caused a temporary bullish reaction.


Electricity Market Overview:

  • Start of the Week: Electricity prices opened at £103.25/MWh on 04/12/2023, reflecting the cold weather's impact on demand.

  • Midweek Trends: The electricity market saw a significant surge to £113.00/MWh on 05/12/2023. However, prices adjusted to £86.00/MWh by 06/12/2023, as warmer temperatures were forecast, potentially reducing heating demand.

  • End of the Week: Prices experienced fluctuations, settling at £84.50/MWh on 08/12/2023, amidst dynamic market conditions and a response to changes in the gas market.


Key Factors Influencing the Market:

  • Weather Conditions: Fluctuating temperatures played a significant role in shaping both gas and electricity prices, with the initial cold spell driving up demand.

  • Supply Dynamics: Healthy LNG supply, Norwegian production, and robust storage levels contributed to balancing the market despite fluctuations in demand.

  • Market Reactions: The market responded to various factors including weather changes, supply levels, and unexpected outages, leading to price fluctuations throughout the week.


Conclusion:

The UK gas and power markets experienced a week marked by fluctuations due to changing weather conditions and supply dynamics. While the early cold weather increased demand, subsequent milder temperatures and strong supplies led to a general downtrend in gas prices. Electricity prices mirrored these trends but with more significant fluctuations. The market continues to adjust to these evolving conditions, suggesting the potential for continued variability in the upcoming week.




Start of the New Week (11/12/2023):

As the new week begins, the UK gas and power markets have opened with notable changes:

  • Gas Prices: On 11/12/2023, gas prices opened at 90.00 p/th, showing a decrease from the previous week's opening price of 98.20 p/th on 04/12/2023. This represents an 8.36% drop from the same time last week, reflecting continued adjustments to weather conditions and supply dynamics.

  • Electricity Prices: Electricity prices opened at £86.00/MWh on 11/12/2023, compared to £103.25/MWh on 04/12/2023. This indicates a significant decrease of 16.68% from last week's opening, which can be attributed to the warmer weather reducing heating demand and the influence of gas market trends on electricity pricing.


The market's opening scenario on 11/12/2023 suggests a continuation of the trends observed last week, with weather conditions and supply levels remaining key drivers. The reduction in both gas and electricity prices indicates a market response to the improved weather conditions and robust supply, potentially leading to a more stable market in the short term. However, given the nature of energy markets, stakeholders should remain vigilant for any sudden changes in these dynamics as the week progresses.


Graph of the Last Week's Movements:


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

graph to show the wholesale market movements in the last week

Forecast for the Upcoming Week: 11/12/2023 to 18/12/2023


The UK gas and power markets in the upcoming week are expected to be shaped by a mix of weather trends, supply dynamics, and renewable energy outputs. With temperatures forecasted to edge up and stabilize, a decrease in heating demand may exert downward pressure on energy prices. However, the market's sensitivity to sudden changes in weather patterns and fluctuations in renewable energy outputs, particularly wind generation, will be crucial.


As wind speeds are forecast to pick up sharply from 14th December, this could lead to reduced reliance on gas for power generation, influencing gas demand. Additionally, the stability of LNG supplies and the end of outages in domestic production will play a significant role in market dynamics.


Given these factors, stakeholders should monitor the market closely, staying informed about weather forecasts, renewable energy outputs, and supply levels. Flexibility and readiness to respond to rapid changes will be key in navigating the week ahead in the UK energy market.=

 

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)

04/12/2023

98.20

103.25

05/12/2023

94.60

113.00

06/12/2023

95.00

86.00

07/12/2023

96.50

89.25

08/12/2023

94.25

84.50

11/12/2023

90.00

86.00

WEEKLY AVERAGE

94.76

93.67

 

Oil Market Summary: 04/12/2023 to 11/12/2023


Overview

The oil market experienced a week of varied fluctuations influenced by geopolitical events, OPEC+ meetings, and global economic activity.


  • Start of the Week: The week began with oil prices slumping on 04/12/2023. Brent crude futures settled at $78.88 a barrel, down 2.45%, while WTI crude futures dropped to $74.07 a barrel, a decline of 2.49%. This was primarily due to skepticism about the depth of OPEC+ supply cuts and concerns over sluggish global manufacturing activity.

  • Midweek Trends: Throughout the week, the market remained under pressure. On 05/12/2023, Brent crude futures fell further to $78.03 a barrel, and WTI to $73.04, amid concerns about dropping demand and uncertainty around OPEC+ supply cuts. The trend continued on 06/12/2023, with Brent settling at $77.20 and WTI at $72.32, influenced by a stronger U.S. dollar and ongoing demand concerns.

  • Deepening Declines: On 07/12/2023, oil prices fell to their lowest since June, with Brent at $74.30 a barrel and WTI at $69.38. This was driven by U.S. data showing a surprising rise in gasoline inventories and concerns over China's economic health. The decline continued on 08/12/2023, with Brent dropping to $74.05 a barrel and WTI to $69.34, marking six-month lows amid worries about sluggish energy demand in the U.S. and China.

  • End of the Week: The week concluded on a slightly positive note on 11/12/2023, with Brent crude futures rising to $75.84 a barrel (up 2.4%) and WTI crude futures to $71.23 (up 2.7%). This increase was supported by U.S. data indicating potential demand growth. However, the week overall saw both benchmarks losing 3.8%, continuing a seven-week streak of declines, the longest in half a decade.


Key Influencing Factors:

  • OPEC+ Supply Cuts: Doubts about the depth and duration of the announced OPEC+ supply cuts contributed to the market's bearish sentiment.

  • Global Manufacturing Activity: Sluggish global manufacturing activity and weak economic indicators, especially in China, raised concerns about fuel demand.

  • U.S. Labor Data: Positive job growth data from the U.S. provided some bullish influence towards the end of the week.

  • Gasoline Inventories and Dollar Strength: Surprising increases in U.S. gasoline inventories and the strength of the U.S. dollar added to the market's downward pressure.


Forecast for the Upcoming Week: 04/12/2023 to 11/12/2023

The oil market may continue to be volatile, influenced by the aftermath of the OPEC+ meeting, ongoing geopolitical developments, and global economic indicators. Market participants should stay alert to these evolving dynamics, as they will likely influence oil price movements in the coming week.


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:


graph to show last 12 months wholesale market movements
 

Stay Updated with Our Weekly Market Reports


Check our weekly market reports regularly to stay updated on the latest UK energy market trends. This equips you with the knowledge to capitalise on savings opportunities and make smart contract renewal decisions for your business.

 
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Have More Questions?

  • Is it possible to change multiple business utilities at the same time?
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