12/06/2023 - Weekly Wholesale Energy Market Report

Your Weekly Wholesale Energy Market Update - 12/06/2023

See below for the latest weekly wholesale energy market report and movements that have happened in the last week.

Oil and Markets - Weekly Energy Report

In the week starting June 5, 2023, the oil market experienced mixed and volatile sentiments affected by a combination of geopolitical tensions, global demand concerns, and production cuts. On Monday, Brent crude futures saw a significant surge of 2.5% due to the uncertainty surrounding the OPEC+ weekend meeting. In contrast, Tuesday saw Brent crude futures shed 0.5% on fears of sluggish demand due to poor economic growth. On Wednesday, Brent crude prices saw a rise of 0.9%, while on Thursday, it settled lower despite an earlier rebound. Finally, On Friday, Brent crude futures receded, causing concerns over tepid demand worldwide to outweigh last week’s Saudi production cuts.

The volatility of the oil markets can be attributed to various factors, including political events, supply and demand dynamics, and geopolitical tensions. Investors remain cautious despite the bullish news from Saudi Arabia as economic performance in China, and potential recessions in Europe and the US, has impacted the market's demand.

Despite challenging market conditions, the S&P 500 saw strong gains during the week, as hopes for dovish fiscal policy bolstered investor confidence. The market remained range-bound, creating mixed results for global equities, with wall street reporting strong gains, while pan-European indices such as STOXX trading flat and Asian markets struggling.

As the oil market approaches a new week, investors will be looking at upcoming events such as the US' upcoming interest rate hike announcement to inform their decision-making processes.

Gas and Power - Weekly Energy Report

Last week saw continued fluctuations in the Gas & Power markets across the UK and Europe due to a range of supply-side and demand-side factors. On Monday, concerns over liquefied natural gas (LNG) supply to Europe caused some of the LNG to diversify to other regions, leading to a slight dip in prices. However, on Tuesday, the extended outage of Hammerfest LNG caused a bullish push in prices, leading to a significant rise in gas and power prices.

This rise continued on Friday as Norwegian gas field outages and poor renewable generation forecasted for the week caused further upward pressure on prices.

Throughout the week, prices were also impacted by technical corrections and uncertainty about future market conditions. Seasonal contracts saw average increases of up to 8% in the gas market and up to 5.6% in the power market.

These developments highlight the continued sensitivity of the energy markets to global supply disruptions, weather conditions, and other unpredictable factors. Investors and traders must remain informed about the latest market news to make informed decisions. Despite the inherent volatility of the markets, opportunities for profitable investments exist for those who stay abreast of the latest market news and developments.

Jargon Buster

• Bearish - In relation to energy markets, bearish means that there is an expectation of a decrease in the demand for energy products, or an increase in the supply of energy products, which would result in a decrease in the price of energy products. This could be due to a variety of factors such as a slower economic growth, overproduction of oil and gas, or the emergence of alternative sources of energy. A bearish outlook for energy markets suggests that companies operating in the industry may struggle to maintain profits and may be forced to cut costs or reduce production.

• Bullish - In relation to energy markets, bullish means that there is an expectation of an increase in demand for energy products, or a decrease in the supply of energy products, which would result in an increase in the price of energy products. This could be due to various reasons such as a growing global economy, production cuts by major oil-producing countries, geopolitical tensions that impact the supply, or a shift towards renewable energy sources. A bullish outlook for energy markets suggests that companies operating in the industry may see increased profits and may be able to invest in new projects to meet the growing demand for energy products.

How the market has opened each day:

7 day averages

Gas (pence per therm) 67.42

Electric (£ per MWh) 74.08

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