Monthly Energy Market Overview: August 2024
August 2024 was characterised by significant volatility in the UK gas and power markets, driven by a complex interplay of geopolitical tensions, ongoing maintenance, and varying demand patterns. In this report, we analyse the key factors that influenced the markets throughout the month, compare these trends with previous months, and offer a forecast for September 2024.
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Key Highlights for August 2024
Gas Market: The National Balancing Point (NBP) experienced notable price volatility, with an average price of 85.55p/th in August, a marked increase from July. This was primarily driven by geopolitical tensions and maintenance disruptions.
Power Market: Electricity prices averaged £63.88/MWh, influenced by fluctuations in wind generation, nuclear output, and ongoing geopolitical issues.
Gas Market Analysis
August Overview
August saw substantial fluctuations in gas prices. Early fears of disruptions due to Middle Eastern tensions and ongoing maintenance activities in Norway and the UK Continental Shelf tightened supply, peaking prices at 95.00p/th by month-end.
Summary of Key Influences
Geopolitical Tensions: Events in the Middle East, such as conflicts involving Hamas and Hezbollah, raised concerns about supply security.
Maintenance Disruptions: Ongoing maintenance in Norway and UKCS restricted gas flow, pushing prices higher.
Wind Generation Impact: Increased wind generation mid-month provided temporary relief to gas demand, leading to a brief dip in prices.
Power Market Analysis
August Overview
Electricity prices in August were notably volatile due to shifting wind generation and external factors like reduced nuclear capacity in France. Lower wind speeds increased reliance on gas-fired power, raising prices, while geopolitical issues kept the market unsettled.
Summary of Key Influences
Wind Generation: Fluctuations in wind speeds significantly impacted gas-for-power demand.
Nuclear Output: Reduced nuclear capacity, especially from French reactors, increased reliance on gas.
Geopolitical Factors: Tensions in the Middle East added to market volatility.
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Comparative Analysis: July vs. August 2024
Gas Prices: The average gas price of 85.55p/th in August marked a 13.27% increase from July’s 75.53p/th, driven by geopolitical tensions and maintenance issues.
Electricity Prices: Despite volatility, the average electricity price decreased to £63.88/MWh in August, down 13.23% from July’s £73.61/MWh, owing to increased renewable generation.
Summary of Market Trends
Gas Market: Prices have generally trended upwards over the past three months, reflecting tight supply and geopolitical risks.
Power Market: Although variable, power prices trended slightly downward in August due to improved renewable output.
Energy Market Averages
DATE | GAS (pence per therm) | ELECTRIC (£ per MWh) |
Last 7 Days | 93.02 | 87.30 |
Last Month | 85.55 | 63.68 |
Last Year | 82.63 | 76.11 |
Three-Month Market Comparison: May to August 2024
Gas Market
May 2024: 74.00p/th - A steady increase due to maintenance activities.
June 2024: 82.50p/th - Price rise driven by unplanned outages and geopolitical tensions.
July 2024: 75.53p/th - Slight dip with improved supply conditions balancing demand.
August 2024: 85.55p/th - Surge due to ongoing geopolitical concerns and maintenance disruptions.
Power Market
May 2024: £73.50/MWh - Fluctuations driven by wind generation and gas-for-power demand.
June 2024: £75.28/MWh - Increased reliance on gas-fired power led to higher prices.
July 2024: £73.61/MWh - Continued volatility due to varying wind speeds and maintenance.
August 2024: £63.88/MWh - Prices decreased thanks to improved renewable output, despite volatility.
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Forecast for August 2024
Looking Ahead: September 2024 Forecast
As we move into September, market volatility is expected to continue. Key factors to watch include:
Weather Conditions: Cooler temperatures may increase heating demand, impacting gas prices.
Maintenance Schedules: Ongoing maintenance in Norway and the UKCS will likely keep the market tight.
Geopolitical Tensions: Continuing conflicts in the Middle East could disrupt market stability.
Nuclear Power Output: The return of European reactors could stabilise electricity prices.
Conclusion
August 2024 was a month of significant volatility in the UK gas and electricity markets. Geopolitical tensions, maintenance disruptions, and fluctuations in renewable energy output drove these changes. As we move into September, staying informed and agile will be key to navigating the market’s dynamics.
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Last 12 month market movements
As we examine the broader trends, this graph provides a retrospective look at the last 12 months in the monthly energy market. It charts the day-ahead wholesale prices for gas and electricity, illustrating the volatility and trends that have shaped the market over the year.
Oil Market Summary for August 2024:
The oil market in August 2024 experienced significant fluctuations influenced by geopolitical tensions, economic indicators, and supply-demand dynamics. Here's a detailed overview of the key trends and price movements throughout the month:
Starting Price and Ending Price:
Brent Crude: Opened the month at $80.72 per barrel and closed at $79.94 per barrel.
WTI Crude: Began at $77.91 per barrel and ended at $75.91 per barrel.
Highest and Lowest Prices:
Brent Crude: Reached its monthly high at $82.30 per barrel and dipped to a low of $76.05 per barrel.
WTI Crude: Peaked at $80.06 per barrel and had its lowest at $71.93 per barrel.
Significant Changes:
Early August: Oil prices were initially buoyed by concerns over geopolitical instability in the Middle East, including the assassination of a Hamas leader in Iran, which raised fears of a broader conflict that could disrupt oil supplies. Brent crude hit $80.72 per barrel on August 1st, reflecting these concerns. However, by August 2nd, prices settled lower as the market recalibrated, realizing that global supply remained largely unaffected despite the geopolitical tensions.
Mid-August: Oil prices saw a mix of bullish and bearish influences. While the market experienced upward pressure due to fears of a widening Middle Eastern conflict, weak economic data from China and the U.S. suggested lower demand, pulling prices down. Brent fell to its lowest level since January on August 5th, at $76.81 per barrel. Market sentiment was also impacted by unexpected increases in U.S. crude inventories and signs of a slowing global economy, further contributing to price volatility.
Late August: Towards the end of the month, oil prices rebounded on supply concerns stemming from production cuts in Libya and potential output reductions in Iraq. Brent closed at $79.94 per barrel on August 30th, as traders responded to ongoing supply disruptions and the prospect of tighter global supplies.
Average Prices for the Month:
Brent Crude: Approximately $78.90 per barrel.
WTI Crude: Around $75.30 per barrel.
Commentary:
August 2024 was marked by significant fluctuations in oil prices, driven by a combination of geopolitical tensions and economic indicators. The market was particularly sensitive to developments in the Middle East, with concerns about potential supply disruptions contributing to price volatility. At the same time, weak economic data from major economies like China and the United States raised concerns about demand growth, exerting downward pressure on prices. The month saw a complex interplay between supply fears and demand signals, reflecting the ongoing uncertainty in the global oil market.
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