Welcome to our Weekly Energy Market update, where we delve into the latest trends and changes from 16th September to 23rd September 2024. In this update, we provide an overview of key fluctuations in the UK gas and power markets, highlighting trends, insights, and forecasts for the coming week to help you make informed decisions for your business.
Snapshot of Weekly Energy Market Averages
Average Gas Price: 82.33 p/th (↓3.39%)
Average Electricity Price: £81.39/MWh (↑15.10%)
Gas and Power Market Overview
Gas Market
The gas market saw some volatility last week, with prices fluctuating between 81.50 p/th and 84.50 p/th as the week progressed. The week began with a decrease in prices due to higher gas flows from Norway, which eased supply concerns. However, prices rebounded slightly towards the end of the week, largely driven by colder weather forecasts and the continuation of Norwegian maintenance impacting supply levels.
Start of the week: 81.50 p/th on Monday, 16th September
End of the week: 84.50 p/th on Friday, 23rd September
Power Market Overview
The power market mirrored some of the movements seen in gas, with electricity prices fluctuating between £78.10/MWh and £85.50/MWh. Early in the week, stronger wind speeds reduced the need for gas-fired power, keeping prices lower. However, as wind speeds dropped later in the week, reliance on gas-fired generation increased, leading to a slight rise in power prices.
Start of the week: £81.25/MWh on Monday, 16th September
End of the week: £83.50/MWh on Friday, 23rd September
How Does This Compare to Last Week?
Period | Average Gas Price (p/th) | Average Electricity Price (£/MWh) |
Last Week (09/09/2024 - 16/09/2024) | 85.22 | 70.70 |
This Week (16/09/2024 - 23/09/2024) | 82.33 | 81.39 |
Percentage Change | -3.39 | +15.10 |
Gas Prices: The average gas price decreased by 3.39%, from 85.22 p/th to 82.33 p/th. This decrease was driven by higher Norwegian gas flows and milder weather conditions, which reduced demand.
Electricity Prices: In contrast, the average electricity price increased by 15.10%, rising from £70.70/MWh to £81.39/MWh. This increase was largely due to colder-than-expected temperatures, which drove up demand for heating and increased reliance on gas-for-power generation.
Factors Driving Gas and Power Prices This Week
Key Influences on Gas Prices
Increased Norwegian Flows: Early in the week, Norway ramped up its gas exports following the end of key maintenance, which temporarily increased supply.
Colder Weather Forecasts: A cold snap forecasted for the end of September pushed demand higher as businesses prepared for increased heating needs.
Norwegian Maintenance: Lingering maintenance at key infrastructure points in Norway limited imports into the UK towards the end of the week, tightening supply and driving prices up.
Key Influences on Electricity Prices
Fluctuating Wind Speeds: Strong winds at the start of the week reduced gas-for-power demand, but weaker winds later in the week increased reliance on gas-fired generation.
Gas-for-Power Demand: As wind speeds fluctuated, the reliance on gas-fired power plants directly impacted electricity prices.
Weather Conditions: Colder temperatures throughout the week, particularly towards the weekend, increased overall electricity consumption.
Market Forecast for the Upcoming Week
Looking ahead to the upcoming week, there are several factors that could influence gas and electricity prices:
Norwegian Gas Flows
Norwegian maintenance is expected to ease, which should stabilise gas supply. This could place downward pressure on gas prices if demand remains steady.
Temperature Forecast
The weather is expected to be slightly milder from midweek onwards, with temperatures rising back to seasonal norms. This could reduce residential heating demand, potentially easing both gas and electricity prices.
Wind Generation
A forecast for stronger wind speeds later in the week could increase renewable power generation. This is likely to reduce gas-for-power demand, which could lower electricity prices.
Geopolitical Factors
Any unexpected developments in global energy supply chains, such as disruptions in LNG shipments or tensions in gas-exporting countries, could have an immediate impact on market volatility.
What to Watch:
Renewable Energy Output: Stronger wind speeds could lead to more power generation from renewables, reducing reliance on gas for electricity production.
Colder Temperatures: If forecasts change and temperatures dip below expectations, gas demand could rise again, potentially pushing prices up.
Supply Chain Disruptions: Keep an eye on any sudden geopolitical developments, particularly in gas-exporting countries, which could affect supply.
Client Success Story
At The Smart Energy Company, we provide ongoing insights and tailored advice, helping businesses secure the best rates at the right time.
"I've worked with a lot of energy brokers and unfailingly they just want a quick transaction after a 5-minute call. The Smart Energy Company sent us weekly pricing and shared sector insights for several months before we signed paper. How could we use anyone else? Also, they found the best pricing. We did check."
-- Chris DuCousso, Director, Gym Owner
Weekly Oil Market Summary: 16th September - 23th September 2024
Oil Market Overview
While the focus of our updates is on gas and power, it’s important to keep an eye on the oil market as it often influences energy prices. Oil serves as a global benchmark for energy costs, and fluctuations in the oil market can have ripple effects on gas and power prices, especially when it comes to supply chain disruptions and geopolitical tensions.
Here’s a quick look at the key trends in the oil market from 16th September to 23rd September 2024:
Key Movements:
16/09/2024 – Oil prices fell by 2% due to weaker-than-expected U.S. jobs data and signals of sluggish demand growth in China. Brent crude futures dropped to $71.06/barrel, while WTI crude fell to $67.67/barrel.
17/09/2024 – Brent crude rose 1.1% amid concerns over a potential Gulf of Mexico hurricane affecting offshore oil production.
18/09/2024 – A dip in oil prices as economic concerns persisted, with Brent closing at $69.19/barrel, marking a 3-year low.
19/09/2024 – Oil prices rose more than 2%, as fears of a prolonged production shutdown in the U.S. Gulf of Mexico due to Hurricane Francine caused a rally.
20/09/2024 – Prices fell slightly after the storm passed, with Gulf of Mexico production resuming.
Conclusion & Advice for Businesses
With gas prices easing and electricity prices rising due to weather conditions and supply fluctuations, this week presents both challenges and opportunities. Here’s what businesses should consider:
Potential Savings: The drop in gas prices could provide opportunities to lock in favourable rates for businesses that rely on gas.
Long-Term Strategy: Fixing energy contracts now could help businesses avoid future price volatility, particularly as colder weather approaches.
Stay Informed: Monitoring weekly updates like this ensures your business stays ahead of market changes and potential cost-saving opportunities.
For tailored advice and a free, no-obligation quote, get in touch with us today.
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