In this weekly energy market update, we explore the key changes in the UK gas and power markets from 7th October to 14th October 2024. This week, global geopolitical events continued to drive price fluctuations, and supply factors played a role in influencing both gas and electricity prices. Read on to learn more about how these movements could impact your business and what to consider when planning your energy contracts.
Snapshot of Weekly Energy Market Averages
Average Gas Price: 96.45 p/th (↑1.28%)
Average Electricity Price: £86.52/MWh (↑1.29%)
Gas and Power Market Overview
Gas Market
Gas prices remained high this week, closing at 97.20 p/th on Friday, 14th October, slightly lower than the 98.63 p/th recorded on 11th October. The primary driver behind this week's high gas prices was continued concern over the Middle East conflict and the potential threat to energy infrastructure. Both Israel and Iran issued warnings, which have kept the market on edge. This geopolitical uncertainty has also affected oil prices, pushing them up by nearly 10% over the past week.
The gas market started the week at 97.20 p/th on Monday, 7th October, reaching a peak of 98.63 p/th by Friday, 11th October. Despite stable gas supply from Norway, the market remained volatile due to rising temperatures and geopolitical risk, which influenced overall market sentiment.
Power Market Overview
Electricity prices followed a similar trend, starting the week at £89.00/MWh and closing slightly lower at £87.50/MWh on 14th October. The drop in electricity prices during mid-week, particularly on 9th October when it fell to £75.00/MWh, was due to increased wind power generation, which reduced the need for gas-fired electricity generation.
However, the market saw some upward pressure later in the week as lower wind speeds and colder weather pushed up electricity demand. Electricity prices reached a high of £97.35/MWh on 11th October before dipping again.
How Does This Compare to Last Week?
Period | Average Gas Price (p/th) | Average Electricity Price (£/MWh) |
Last Week (30/09/2024 - 07/10/2024) | 95.25 | 85.42 |
This Week (07/10/2024 - 14/10/2024) | 96.45 | 86.52 |
Percentage Change | +1.28% | +1.29% |
Gas Prices: The average gas price increased by 1.28%, rising from 95.24 p/th to 96.45 p/th. This was driven by ongoing geopolitical tensions and concerns over potential attacks on energy infrastructure.
Electricity Prices: The average electricity price rose by 1.29%, climbing from £85.42/MWh to £86.52/MWh. Colder weather and reduced wind generation mid-week pushed prices higher.
Factors Driving Gas and Power Prices This Week
Key Influences on Gas Prices
Geopolitical Tensions: Ongoing threats between Israel and Iran kept gas prices elevated. Despite stable supply, uncertainty in the region continues to drive price fluctuations.
Colder Weather: Temperatures across the UK dropped, leading to higher gas demand for heating. However, rising temperatures are expected to ease demand in the coming weeks.
Supply Concerns: Although Norwegian gas supply has been steady, the potential for further production issues and geopolitical risks added upward pressure to prices.
Key Influences on Electricity Prices
Wind Generation: Strong wind generation early in the week helped lower prices by reducing the need for gas-fired power. However, this was short-lived as wind speeds dropped mid-week.
Colder Temperatures: The demand for electricity rose as colder weather increased heating requirements, especially in areas reliant on electric heating.
Market Forecast for the Upcoming Week
Looking ahead, several factors are expected to influence gas and electricity prices in the coming week:
Weather Trends: While temperatures are forecast to rise in the short term, they are expected to drop again as we approach the end of October, which could increase demand for both gas and electricity.
Geopolitical Developments: The ongoing conflict in the Middle East remains the biggest source of uncertainty. Any new developments, especially related to threats against energy infrastructure, could push prices higher.
Wind Generation: If wind speeds pick up as forecasted, this could ease electricity prices slightly by reducing reliance on gas-fired power generation.
Client Success Story
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Weekly Oil Market Summary: 7th October - 14th October 2024
While our focus is primarily on gas and electricity, oil prices also play a crucial role in shaping energy markets. This week, oil prices saw substantial fluctuations due to geopolitical tensions in the Middle East:
14/10/2024: Brent crude oil settled at $79.04/barrel, down slightly from last week but still up significantly compared to early October.
Key Influences: Concerns about supply disruptions from the Middle East continued to support oil prices, although there was some relief following diplomatic efforts to de-escalate tensions.
Conclusion & Advice for Businesses
As gas and electricity prices continue to rise, businesses face the challenge of managing energy costs in an unpredictable market. Here are a few things to consider:
Potential Risks: Waiting too long to secure a contract could result in higher energy costs, especially as we approach winter.
Strategic Timing: Monitor market trends and consider locking in contracts when prices show signs of stabilising. With geopolitical risks looming, acting early could save your business money.
Stay Informed: Sign up for our weekly energy market updates to stay ahead of the market and ensure you’re making informed decisions about your energy contracts.
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For more insights or to discuss your energy needs, get your free business energy quote now by visiting https://www.smart-energy.uk/free-business-energy-quote or calling us on 0151 459 3388.
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