In this weekly energy market update, we review the key changes in the UK gas and power markets, from 14th to 21st October 2024. This week has seen significant shifts due to weather changes, Norwegian supply issues, and a fluctuating oil market. Here’s a quick breakdown of what happened and how it could impact your business.
Snapshot of Weekly Energy Market Averages
Average Gas Price: 96.23 p/th (↓0.23%)
Average Electricity Price: £80.36/MWh (↓7.12%)
Gas and Power Market Overview
Gas Market
The UK gas market has remained fairly stable, with slight fluctuations. Gas prices hovered around 96.23 p/th for the week, a marginal decline compared to the previous week. Norwegian gas flows into the UK have fluctuated due to ongoing maintenance, though these disruptions were offset by increased liquefied natural gas (LNG) sendouts from terminals like Dragon.
The week started with gas prices at 98.10 p/th on Monday, 14th October, but demand softened throughout the week as local consumption dropped due to warmer-than-expected weather. By Friday, prices had settled at 95.25 p/th.
Power Market Overview
Electricity prices saw a more notable decline this week, with the average price falling to £80.36/MWh, down from last week’s average of £86.52/MWh. The sharpest drop occurred mid-week, as wind power generation picked up and gas-for-power demand eased. Electricity prices reached their lowest point at £64.75/MWh on Friday, 18th October.
How Does This Compare to Last Week?
Period | Average Gas Price (p/th) | Average Electricity Price (£/MWh) |
Last Week (07/10/2024 - 14/10/2024) | 96.45 | 86.52 |
This Week (14/10/2024 - 21/10/2024) | 96.45 | 80.36 |
Percentage Change | -0.23% | -7.12% |
Gas Prices: The average gas price remained largely stable, with a slight decline of 0.23%.
Electricity Prices: The average electricity price dropped by 7.12%, largely due to increased wind power and milder weather reducing gas demand for power generation.
Factors Driving Gas and Power Prices This Week
Key Influences on Gas Prices
Norwegian Supply Issues: Norwegian exports were inconsistent due to maintenance at key facilities like Oseberg, affecting the overall balance of gas supply.
Warmer Weather: Higher-than-expected temperatures reduced demand for gas heating, contributing to the slight easing of prices.
LNG Sendouts: Increased LNG deliveries, particularly from the Dragon terminal, helped maintain supply despite the lower pipeline flows.
Key Influences on Electricity Prices:
Wind Power Generation: Stronger winds mid-week boosted renewable energy production, lowering the demand for gas-fired electricity and pushing prices down.
Mild Temperatures: Milder weather reduced the need for heating, contributing to lower overall demand for electricity.
Market Forecast for the Upcoming Week
Looking ahead to the coming week, several factors could shape gas and electricity prices:
Norwegian Gas Flows: Norwegian production is expected to recover as maintenance at Oseberg ends. However, any new disruptions could tighten supply and push prices higher.
Weather Trends: While temperatures are expected to remain mild, any sudden cold spells could increase demand for both gas and electricity.
Wind Power Forecast: Wind generation is likely to remain strong, which could continue to ease pressure on electricity prices in the short term.
Client Success Story
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Weekly Oil Market Summary: 14th October - 21st October 2024
Oil prices have been volatile this week, largely driven by geopolitical tensions and fluctuating demand expectations:
14/10/2024: Brent crude settled at $79.04/barrel, down slightly due to concerns about Middle East supply disruptions.
21/10/2024: Brent crude fell to $73.06/barrel, down over 7% for the week as investors reacted to a mixed Middle East outlook and concerns about slowing economic growth in China.
Conclusion & Advice for Businesses
While gas prices have remained stable, electricity prices have dropped due to stronger renewable output and lower demand. If your business relies on gas and electricity, it’s essential to stay informed about these changes, as winter could bring further volatility. Here are a few things to consider:
Potential Risks: With fluctuating energy prices, waiting too long to lock in a contract could leave your business exposed to higher rates in the future.
Strategic Timing: Keep an eye on forecasts and consider securing a contract when prices are favourable, particularly before the colder months set in.
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