December 2024 UK Energy Market Trends: Gas, Power, and Oil

December 2024 UK Energy Market Trends: Gas, Power, and Oil

December 2024 brought significant movement in the UK’s energy markets, with colder weather, robust supply, and geopolitical factors playing a key role in shaping gas, electricity, and oil prices. As businesses navigate the winter period, understanding these trends is crucial for planning ahead and managing energy costs effectively.

Key Highlights for December 2024

• Gas Prices: Day-ahead gas prices fluctuated, reaching a high of 119.10p/th and a low of 97.05p/th, reflecting colder temperatures and strong supply dynamics. The average price of 110.61p/th marked a 1.47% decrease compared to November’s 112.26p/th.

• Electricity Prices: Power prices showed volatility, spiking at £215.47/MWh on 13 December but settling lower toward the end of the month. The average price of £103.87/MWh represented a 0.98% increase compared to November’s 102.86/MWh.

• Oil Prices: Brent crude prices hovered between $70 and $74 per barrel, impacted by geopolitical tensions and concerns over supply and demand.

Gas Market Overview

What Happened in December?

Gas prices experienced a rollercoaster ride throughout December. Early in the month, colder weather and reduced wind speeds drove higher demand for gas-fired power generation. However, robust LNG sendout and Norwegian imports helped stabilise prices as the month progressed.

Key figures:

• Highest Price: 119.10p/th (30 December)
• Lowest Price: 97.05p/th (17 December)
• Average Price: 110.15p/th

Key drivers:

• Weather: Colder-than-average temperatures early in the month pushed demand higher, but milder conditions mid-month caused a temporary dip in prices.
• Supply: Strong LNG arrivals and minimal Norwegian maintenance supported supply stability.
• Demand: Increased heating needs and steady gas-for-power demand were balanced by rising wind generation later in the month.
  

Power Market Overview

Electricity Prices and Trends

Electricity prices mirrored gas market fluctuations, with notable spikes during colder spells and weaker wind generation. The highest price, £215.47/MWh on 13 December, was driven by reduced renewable output and colder weather.

Key figures:

• Highest Price: £215.47/MWh (13 December)
• Lowest Price: £61.02/MWh (18 December)
• Average Price: £101.20/MWh

Key drivers:

• Renewables: Wind generation varied significantly, with weaker output during cold snaps driving reliance on gas-fired power.
• Temperature Drops: Colder weather early and late in December increased electricity demand for heating.
• Supply: High LNG arrivals and nuclear power availability helped stabilise prices during milder periods.
  

Oil Market Overview

Brent Crude Prices and Influences

Oil prices remained relatively steady in December, fluctuating between $70 and $74 per barrel. Geopolitical developments, such as sanctions on Russian oil and changing dynamics in the Middle East, created occasional price surges.

Key drivers:

1. Geopolitical Tensions: The ongoing Russia-Ukraine conflict and sanctions on Russian oil kept prices volatile.
   
2. Demand Concerns: Slower economic growth in China and Europe weighed on prices, though optimism about 2025 policies offered some support.
3. Supply Outlook: OPEC+ decisions to extend production cuts until 2026 helped stabilise the market despite fears of oversupply.
   

12-Month Energy Market Trends

A Look Back at 2024

The energy market in 2024 experienced significant volatility due to geopolitical tensions, weather extremes, and fluctuating supply dynamics. The graph below illustrates the 12-month trends for gas (grey line) and electricity (blue line), showing how prices have risen steadily since early summer before stabilising towards the year-end.

Looking Ahead: January 2025 Forecast

As we move into January, the following factors could shape the UK energy market:

1. Colder Weather Ahead: Forecasters predict below-average temperatures in early January, which could drive higher gas and electricity demand.
2. Wind Generation: Expected stronger wind speeds may provide relief to electricity prices.
3. Geopolitical Risks: Ongoing tensions in Eastern Europe and discussions around Russian gas flows through Ukraine could impact gas markets.

What this means for your business: Securing energy contracts now could help lock in favourable rates before potential price hikes later in the winter.

Why Choose The Smart Energy Company?

Navigating the energy market can be challenging, especially with ongoing volatility. At The Smart Energy Company, we provide businesses with expert insights, tailored energy procurement solutions, and access to competitive rates.

Get ahead of the market today!

• Sign up for monthly energy market reports to stay informed on the latest trends.
• Request a free energy quote and see how much your business could save.

Conclusion

December 2024 highlighted the importance of understanding market trends to navigate energy price fluctuations effectively. By keeping an eye on key drivers such as weather, supply, and geopolitical developments, businesses can make informed decisions.



For personalised guidance and support, trust The Smart Energy Company to help your business thrive, no matter the market conditions.

Need Tailored Advice for Your Business?

Contact us today at 0151 459 3388 or request your free energy quote and stabilise your energy costs. At Smart Energy Company, we specialise in finding the best utility contracts for your business, ensuring you never miss a renewal and always get the best deals.