Welcome to our 'Weekly Energy Market' update, where we delve into the latest trends and changes from 09th September to 16th September 2024. In this update, we provide an overview of key fluctuations in the UK gas and power markets, highlighting trends, insights, and forecasts for the coming week.
Weekly Energy Market At A Glance
Gas and Power Market Overview
This past week, gas prices fluctuated due to ongoing maintenance in Norway, changes in demand, and weather patterns. Electricity prices also moved in response to gas-for-power demand and renewable energy output.
09/09/2024:
Gas: The NBP DA contract rose by 1.6p/th to 87.5p/th, largely due to extended maintenance at Kollsnes and a cold snap increasing local residential demand.
Power: Electricity prices dropped sharply to £36.00/MWh, driven by strong renewable generation, especially from wind, which reduced the need for gas-for-power generation.
10/09/2024:
Gas: The contract increased by 1.5p/th to 89p/th as Norwegian maintenance continued and colder temperatures lifted residential demand. U.S. LNG export facility shutdowns also added upward pressure.
Power: Prices recovered to £55.50/MWh as wind generation underperformed, increasing gas-for-power demand.
11/09/2024:
Gas: The NBP DA corrected downward, falling 3.75p/th to 85.25p/th, influenced by weaker demand forecasts and tracking losses from the European gas market.
Power: Electricity prices increased to £78.60/MWh as gas-for-power demand rose with weaker wind generation, driving up prices.
12/09/2024:
Gas: Prices increased by 2.75p/th to 88p/th, reflecting a rise in gas-for-power demand as wind generation dropped. The impact of U.S. hurricanes also boosted market sentiment.
Power: Electricity prices increased to £84.35/MWh, driven by declining wind generation and higher gas consumption for power.
13/09/2024:
Gas: NBP DA fell by 2.75p/th to 85.25p/th as concerns over Hurricane Francine’s impact on U.S. LNG exports eased. Warmer weather forecasts for the upcoming week also dampened demand.
Power: Electricity prices rose to £88.50/MWh as wind generation remained weak and warmer temperatures contributed to higher energy consumption.
16/09/2024:
Gas: The NBP DA edged up by 0.5p/th to 85.8p/th as Norwegian flows resumed via Langeled, which slightly loosened the UK supply balance.
Power: Electricity prices settled at £81.25/MWh, with wind generation improving slightly, offsetting higher gas-for-power demand.
Key Influences:
This week's energy market was shaped by various factors influencing both gas and power prices:
Norwegian Maintenance:Ongoing maintenance at Norwegian facilities limited gas flows to the UK throughout the week. Langeled's return toward the end of the week helped loosen the UK balance, though withdrawals were still necessary.
Weather Patterns:A significant drop in temperatures earlier in the week boosted residential gas demand. Windspeeds fluctuated, affecting gas-for-power demand, with wind generation dropping midweek and recovering slightly by the weekend.
U.S. LNG Export Facilities:Disruptions at U.S. LNG export facilities, particularly due to Hurricane Francine, contributed to price volatility. Concerns eased toward the end of the week as the hurricane was downgraded, though ongoing geopolitical risks remain.
How Does This Compare to Last Week?
Gas and Power Market Comparison:
Last Week (2nd September - 9th September 2024):
Average Gas Price: 88.41 p/th
Average Electricity Price: £75.93/MWh
This Week (9th September - 16th September 2024):
Average Gas Price: 85.55 p/th
Average Electricity Price: £70.70/MWh
Percentage Changes:
Gas Price Decrease: 3.23%
Electricity Price Decrease: 6.89%
This week saw a 3.23% decrease in average gas prices, falling from 88.41 p/th to 85.55 p/th. This drop was driven by the return of Norwegian flows and reduced geopolitical risks. Similarly, electricity prices saw a 6.89% decrease, falling from £75.93/MWh to £70.70/MWh. This was largely influenced by improved wind generation and lower gas-for-power demand as wind speeds recovered midweek.
Market Forecast for the Upcoming Week
Norwegian Maintenance:Norwegian maintenance is set to continue at Kollsnes and other facilities, but with Norwegian flows improving by the end of last week, supply should stabilise. However, the potential for further disruptions remains, especially if additional maintenance is announced or extended.
Weather Impact:After this week's cooler weather, temperatures are expected to rise back to seasonal norms by mid-week. As temperatures recover, local residential demand for gas is likely to decrease, which should alleviate some pressure on gas prices.
LNG Imports:LNG send-outs from the U.S. may face further delays following disruptions caused by recent hurricanes. However, as weather conditions improve, any significant delays or further shutdowns could add bullish pressure to gas prices.
Weekly Oil Market Summary: 9th September - 16th September 2024
Oil Market Overview
This past week, oil prices were impacted by various factors, including Hurricane Francine's disruption to U.S. oil production, concerns over demand in China, and updates from OPEC and the U.S. Federal Reserve. Here’s a breakdown of key movements and factors influencing the oil market:
09/09/2024:
Price Movement: Oil prices fell 2% on Friday, with Brent crude futures closing at $71.06/barrel and WTI crude settling at $67.67/barrel. Weaker-than-expected U.S. jobs data and expectations of a rise in OPEC+ supply in October led to the decline, despite support from OPEC+ delaying supply increases.
10/09/2024:
Price Movement: Brent crude rose 1.1%, settling at $71.90/barrel, as the market prepared for potential disruptions from Tropical Storm Francine, which was expected to evolve into a hurricane and affect oil production in the Gulf of Mexico. Despite demand concerns, the Libyan supply disruption also supported prices.
11/09/2024:
Price Movement: Brent crude dropped 3.7% to settle at $69.19/barrel, marking a 3-year low. OPEC revised down its oil demand forecast for 2024 and 2025, contributing to the fall, along with continued concerns over economic weakness in China.
12/09/2024:
Price Movement: Oil prices rebounded, with Brent crude rising 2.05% to settle at $70.61/barrel, while WTI increased to $67.31/barrel. The upward movement was driven by fears of extended production shutdowns in the U.S. Gulf of Mexico due to Hurricane Francine, which forced the evacuation of many offshore rigs.
13/09/2024:
Price Movement: Brent crude rose 1.9%, closing at $71.97/barrel, as more than 42% of oil production in the Gulf of Mexico remained shut due to the hurricane’s impact. Despite lingering concerns over weak global demand, the immediate supply disruptions buoyed prices.
16/09/2024:
Price Movement: Oil prices fell slightly on Friday as production resumed in the Gulf of Mexico after Hurricane Francine. Brent crude settled at $71.61/barrel, while WTI crude closed at $68.65/barrel. The decrease was modest, as production ramped back up and data showed a weekly rise in the U.S. rig count. OPEC and the International Energy Agency also lowered their demand forecasts due to economic struggles in China.
Key Influences on the Oil Market This Week:
Hurricane Francine:The major storm shut down a significant portion of U.S. crude production in the Gulf of Mexico, with nearly 42% of the region’s output halted at its peak. While the storm’s impact initially boosted prices, production began to resume by the end of the week.
Global Economic Concerns:Ongoing concerns over economic weakness in China, the world’s largest oil importer, weighed heavily on the market. China’s economic struggles have dampened global oil demand expectations, contributing to the bearish sentiment for much of the week.
OPEC+ Supply and Demand Forecasts:Both OPEC and the International Energy Agency revised their demand growth forecasts downward for 2024 and 2025, reflecting weaker-than-expected global demand. This added further pressure to oil prices.
U.S. Jobs Data and Interest Rate Expectations:Weaker U.S. jobs data in August, combined with expectations of a more moderate interest rate cut by the Federal Reserve, reduced optimism about economic growth, further influencing oil price movements.
Market Forecast for the Upcoming Week:
In the coming week, oil prices are expected to stabilise as production fully resumes in the Gulf of Mexico. However, any potential new developments in the U.S. Federal Reserve’s interest rate policy and further revisions to global demand forecasts could influence price volatility. The market will continue to monitor China’s economic recovery and its impact on global demand.
Advice for Your Business
For advice that fits with the latest market situation, get in touch for a free business energy quote. Our team at the Smart Energy Company is ready to help you make informed choices, tailored to the market’s current state.
Get Your Free Business Energy Quote Today
Keep visiting our blog for weekly updates. If you have any questions or need more detailed advice, we’re just a call away. We’ll help you navigate through the market changes with ease and confidence.
Or Call us on 0151 459 3388
Comments