Welcome to our 'Weekly Energy Market' update, where we dissect the latest trends and changes from 15th July to 22nd July 2024. Your guide through the fluctuations of the last week: revealing trends, insights, and forecasts in the UK energy markets.
Weekly Energy Market At A Glance
Gas Market Overview
The gas market experienced notable fluctuations throughout the week. Here's a summary of the key movements and factors influencing the market:
15/07/2024: NBP DA inched up despite a loose supply side balance, closing at 71.50p/th. UKCS flows increased and the UK system opened long. Power prices settled at £70.75/MWh.
16/07/2024: NBP DA traded more bearishly, closing at 71.7p/th, influenced by lower reliance on LNG and increased pipeline flows. Power prices increased to £77.00/MWh.
17/07/2024: NBP DA traded bullishly, gaining over 6% to close at 76.50p/th, with a slight increase in LNG sendouts and poor wind speeds boosting gas-for-power demand. Power prices rose to £76.50/MWh.
18/07/2024: NBP DA closed lower at 73.0p/th, with increased flows from Norway and stable exports to the continent. Power prices settled at £72.25/MWh.
19/07/2024: Gas prices rose to 74.35p/th due to increased gas-fired generation demand as wind forecasts fell. Power prices increased to £74.00/MWh.
22/07/2024: NBP traded rangebound at 73.35p/th with stable demand and some rerouting of flows to the continent. Power prices were at £73.25/MWh.
Key Influences:
This week's energy market was shaped by a combination of factors impacting both gas and power prices:
Supply and Demand Dynamics: Increased flows from Norway, stable UK gas production, and fluctuating gas-for-power demand due to changing wind speeds.
LNG Sendouts: A slight increase in LNG sendouts despite limited cargo arrivals.
Weather Conditions: Variations in wind speeds and temperature forecasts influenced both gas and power demand.
Maintenance Schedules: Ongoing maintenance on the Norwegian continental shelf impacted supply dynamics.
These combined factors contributed to the observed trends and movements in gas and power prices throughout the week.
How Does This Compare to Last Week?
Gas and Power Market Comparison:
Last Week (8th July - 15th July 2024):
Average Gas Price: 72.49p/th
Average Electricity Price: £72.67/MWh
This Week (15th July - 22nd July 2024):
Average Gas Price: 73.53p/th
Average Electricity Price: £74.63/MWh
This week, both gas and electricity prices showed an increase compared to the previous week. The average gas price rose from 72.49p/th to 73.53p/th, driven by fluctuating wind speeds affecting gas-for-power demand and ongoing maintenance limiting supply. The average electricity price increased from £72.67/MWh to £74.63/MWh, influenced by the same factors affecting gas prices and stable power imports.
Market Forecast for the Upcoming Week
Looking ahead, several factors will influence the gas and power markets:
Stable Supply: Continued stable gas flows from domestic production and imports, with minimal disruptions anticipated.
Renewable Energy: Higher wind speeds are forecasted, which may reduce the demand for gas in power generation, helping to keep prices stable or slightly lower.
Geopolitical Events: While there are currently no major disruptions expected, any unexpected geopolitical events could impact prices.
Demand Trends: Seasonal demand increases and updated forecasts will play significant roles.
Supply Conditions: U.S. inventory levels and rig counts will continue to be key indicators to watch.
We anticipate some stability in prices due to better supply conditions and increased renewable energy output. However, keep an eye on maintenance schedules and geopolitical events.
Weekly Oil Market Summary: 8th July - 15th July 2024
This week saw varied movements in the oil market influenced by economic data, geopolitical events, and market sentiment:
15/07/2024:Brent crude futures settled lower at $85.03/barrel as investors weighed weak U.S. consumer sentiment against hopes for a Federal Reserve rate cut in September.
16/07/2024:Brent crude traded higher, supported by Middle East tensions, OPEC+ output cuts, and positive U.S. economic news. However, bearish pressures from China's contracting macroeconomic data kept prices rangebound.
17/07/2024:Brent crude prices fell to $83.73/barrel amid concerns over decreasing energy demand from China and slower-than-expected Q2 economic growth. Bearish sentiment was partially offset by increasing attacks in the Red Sea.
18/07/2024:Oil prices climbed by about 2%, with Brent futures rising to $85.08/barrel due to a larger-than-expected drop in U.S. crude stockpiles and a weaker U.S. dollar, despite signs of slower economic growth in China.
19/07/2024:Oil prices dipped slightly due to mixed signals from a weakening U.S. growth forecast and the likelihood of interest rate cuts in September.
22/07/2024:Oil prices settled over $2 lower, with Brent crude at $82.63/barrel, as investors eyed a possible ceasefire in Gaza and a strengthened dollar.
Overall: Oil prices fluctuated this week but showed a general downtrend due to easing supply disruption concerns from Hurricane Beryl and mixed economic data. Despite mid-week gains from inventory declines and interest rate cut expectations, the market sentiment remained cautious.
Key Influences:
Economic Data:
Mixed U.S. consumer sentiment and economic data impacted market sentiment.
China's slower-than-expected economic growth and contracting property sector exerted bearish pressure.
Geopolitical Events:
Ongoing Middle East tensions and the potential ceasefire in Gaza influenced price movements.
Increased attack frequency in the Red Sea added to supply concerns.
Market Sentiment:
Expectations of a Federal Reserve rate cut in September provided some support.
Bearish pressures from China and mixed signals from the U.S. economic outlook affected investor confidence.
Market Forecast for the Upcoming Week
Economic Indicators:
Continued monitoring of U.S. economic data and Federal Reserve announcements will be crucial.
Geopolitical Developments:
Ongoing tensions in the Middle East and any developments in Gaza ceasefire negotiations will impact prices.
Demand Trends:
Seasonal demand increases and updated forecasts will play significant roles.
Supply Conditions:
U.S. inventory levels and any changes in OPEC+ production policies will continue to be key indicators to watch.
Overall, the market may see continued volatility with a potential for further price increases if demand forecasts remain strong and supply remains stable.
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