This morning, the Electric wholesale prices have opened up 49.80% lower than this time last week with Gas decreasing by 47.77%.
The oil markets were turbulent and unpredictable last week, with the continuous travesties and uncertainty caused by Russia's war in Ukraine dictating the narrative. Despite the fact that little has changed in terms of fundamentals since the invasion began — Russian flows on critical pipelines into the EU remain stable, and demand relaxes as the weather warms – the market is still ruled by scared mentality. Will the EU stop purchasing Russian gas first, or will Russia switch off the pipes first, will the war extend beyond Ukraine's borders, or will peace talks win in the next days?
Last week was no exception, with a pessimistic tone set as the Russian advance stagnated and German chancellor Scholz resisted a blanket energy import restriction. Despite the fact that the United States and the United Kingdom have put an embargo on Russian oil, the commodity only accounts for a small fraction of each country's demand (just 3 & 5% , respectively.)
Last week, bearish mood prevailed, and energy prices declined for three days in a row across the curve. Month-ahead gas prices fell 32%, while annualised Apr-22 gas prices down 21%, while the electricity equivalent fell 27% and 17%, respectively. Even though prices plummeted by nearly 100p/th, the losses were insufficient to entirely offset the previous week's significant gains. Rates have risen to levels last seen in early March, although they are still lingering near record highs.
As the euro rebounded and there was a return to persistent buying, the wider fuels mix experienced a reversal of the previous week's trend, with Carbon gaining 16% and recovering to €75/MT. Brent was down 5% by the end of the week, coal was down over 9%, and JKM LNG was down over 29% week on week. As gas prices fell, so did support for alternative energy sources, with LNG in particular being harmed by the likelihood of continued European reliance on Russian piped gas (at least in the short term.)
Market optimism is boosted by reports of 'promising' discussions between Russia and Ukraine over the weekend, with a 'common position' expected to emerge 'within days.' As a result, markets are lower this morning, with NBP Q2-22 and the Balance of the Month down over 29p/th [9.5 %].
How the market has opened each day:
Date Electric (£/MWh) Gas (p/therm)
07/03/2022 470.10 536.10
08/03/2022 420.10 500.10
09/03/2022 317.10 373.78
10/03/2022 253.10 300.10
11/03/2022 230.10 310.10
14/03/2022 236.00 280.00
7 day averages
Electric (£ per MWh) 321.08
Gas (pence per therm) 383.36
The below shows how the market compares to the previous week, month and year.
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