Welcome to our 'Weekly Energy Market' update, where we dissect the latest trends and changes from 22nd July to 29th July 2024. Your guide through the fluctuations of the last week: revealing trends, insights, and forecasts in the UK energy markets.
Weekly Energy Market At A Glance
Gas Market Overview
The gas market experienced notable fluctuations throughout the week. Here's a summary of the key movements and factors influencing the market:
The gas market experienced notable fluctuations throughout the week. Here's a summary of the key movements and factors influencing the market:
22/07/2024: The NBP traded rangebound at 73.35p/th, with stable demand despite rerouting of flows from Norway. Power prices were at £73.25/MWh.
23/07/2024: NBP traded rangebound at 73.30p/th due to warm weather and increasing sendout from Norway. Power prices increased to 74.00/MWh.
24/07/2024: NBP DA traded bearishly, closing at 72.30p/th on softer fundamentals and increased Norwegian flows. Power prices settled at £70.50/MWh.
25/07/2024: NBP DA traded bullishly, closing at 75p/th due to concerns over Norwegian maintenance. Power prices were at £72.35/MWh.
26/07/2024: NBP DA traded bearishly, closing at 73.15p/th tracking the TTF DA on the return of Freeport LNG. Power prices were at £73.25/MWh.
29/07/2024: NBP DA closed the week at 75.4p/th, influenced by minor changes in Norwegian maintenance and lower wind power generation. Power prices increased to £76.25/MWh.
Key Influences:
This week's energy market was shaped by a combination of factors impacting both gas and power prices:
Supply and Demand Dynamics: Fluctuations in wind speeds affected gas-for-power demand, while Norwegian flows and LNG sendouts influenced supply.
LNG Sendouts: Limited cargo arrivals impacted supply dynamics, with Freeport LNG's return adding to market movements.
Weather Conditions: Variations in temperatures and wind speeds influenced both gas and power demand.
Maintenance Schedules: Ongoing and anticipated maintenance on the Norwegian continental shelf impacted supply.
These combined factors contributed to the observed trends and movements in gas and power prices throughout the week.
How Does This Compare to Last Week?
Gas and Power Market Comparison:
Last Week (15th July - 22nd July 2024):
Average Gas Price: 73.53p/th
Average Electricity Price: £74.63/MWh
This Week (22nd July - 29th July 2024):
Average Gas Price: 75.01 p/th
Average Electricity Price: £73.60/MWh
This week, both gas and electricity prices showed fluctuations compared to the previous week. The average gas price increased from 73.53p/th to 75.01p/th, driven by varying supply dynamics and maintenance concerns. The average electricity price decreased slightly from £74.63/MWh to £73.60/MWh, influenced by changes in gas prices and renewable energy output.
Market Forecast for the Upcoming Week
Looking ahead, several factors will influence the gas and power markets:
Stable Supply and Demand Dynamics:
Gas: Continued stable gas flows from Norway are expected, although the balance may remain loose due to increasing supply from Langeled and Vesterled. However, maintenance schedules in September may create some uncertainty.
Power: Demand for gas-for-power is expected to remain elevated due to a slump in wind power generation and a cooler weather forecast lifting local consumption.
Renewable Energy:
Wind Speeds: Lower wind speeds are anticipated, which will increase the demand for gas in power generation. This is expected to keep gas-for-power demand elevated until Thursday.
Nuclear Reactors: The return of several nuclear reactors (Heysham 1 on 27 July, Toreness on 28 July, and Heysham 2 on 4 August) is expected to impact the demand dynamics slightly.
Geopolitical Events:
Freeport LNG: Freeport reaching near maximum feedgas flows over the weekend might act bearishly on the gas market as LNG prices were assessed slightly weaker on Friday. However, any further cancellations of nominations or changes in shipment schedules could create volatility.
Weather Conditions:
Temperature Forecasts: A cooler weather forecast for next week is expected to lift local consumption by about 5mcm/d, providing a minor bullish influence on gas demand.
Supply Conditions:
Norwegian Maintenance: The record number of planned maintenance works in September on the Norwegian continental shelf is a significant factor to watch. While current supply remains stable, the upcoming maintenance could create some supply-side risks.
Market Sentiment:
Bearish Influences: Despite the expected stable supply, the market sentiment remains cautiously bearish due to the potential for oversupply from Norway and subdued LNG sendouts.
Overall, we anticipate a mix of stability and minor bullish influences on gas prices due to increased local consumption and ongoing supply dynamics. However, the market may experience volatility due to maintenance schedules and geopolitical developments.
Weekly Oil Market Summary: 22nd July - 29th July 2024
This week saw varied movements in the oil market influenced by economic data, geopolitical events, and market sentiment:
22/07/2024:
Market Movement: Oil prices settled over $2 lower, reaching their lowest level since mid-June due to a possible ceasefire in Gaza and a strengthened dollar.
Brent Crude: Down $2.48 (2.9%) to $82.63/barrel.
WTI Crude: Down $2.69 (3.3%) to $80.13/barrel.
23/07/2024:
Market Movement: Prices continued to fall, marking a one-month low as investors focused on rising stockpiles and signs of weak demand.
Brent Crude: Down 23 cents (0.3%) to $82.40/barrel.
WTI Crude: Down 35 cents to $79.78/barrel.
24/07/2024:
Market Movement: Oil prices fell about 2% to a six-week low due to expectations of a Gaza ceasefire and concerns about demand in China.
Brent Crude: Down $1.39 (1.7%) to $81.01/barrel.
WTI Crude: Down $1.44 (1.8%) to $76.96/barrel.
25/07/2024:
Market Movement: Prices rebounded slightly due to large declines in U.S. crude and fuel stocks but remained near six-week lows due to weak global demand concerns.
Brent Crude: Up 70 cents (0.9%) to $81.71/barrel.
WTI Crude: Up 63 cents (0.8%) to $77.59/barrel.
26/07/2024:
Market Movement: Oil prices rose following strong U.S. economic data but gains were limited by concerns about lower oil imports from China.
Brent Crude: Up 66 cents (0.81%) to $82.37/barrel.
WTI Crude: Up 69 cents (0.89%) to $78.28/barrel.
29/07/2024:
Market Movement: Oil futures fell about 1.5%, finishing the week lower due to declining Chinese demand, hopes of a Gaza ceasefire, and supply concerns.
Brent Crude: Down $1.24 (1.5%) to $81.13/barrel.
WTI Crude: Down $1.12 (1.4%) to $77.16/barrel.
Overall: Oil prices fluctuated this week but showed a general downtrend due to easing supply disruption concerns from Hurricane Beryl and mixed economic data. Despite mid-week gains from inventory declines and interest rate cut expectations, the market sentiment remained cautious.
Key Influences:
Geopolitical Events:
Gaza Ceasefire: Anticipation of a ceasefire between Israel and Hamas influenced market sentiment, reducing the risk premium priced into oil.
Middle East Tensions: The conflict in Gaza and potential for a ceasefire impacted oil prices throughout the week.
Economic Data:
U.S. Economic Growth: Strong U.S. economic data supported higher crude demand expectations.
China's Economic Concerns: Weak demand in China and lower oil imports pressured prices.
Market Sentiment:
Rising Stockpiles: Concerns over ample inventories and weak demand influenced market movements.
Ceasefire Expectations: The potential ceasefire in Gaza reduced geopolitical risks, affecting oil prices.
Supply Conditions:
U.S. Crude and Fuel Stocks: Large declines in U.S. crude and fuel inventories supported prices mid-week.
Canadian Wildfires: Oil supply risks from Canadian wildfires also influenced the market.
Market Forecast for the Upcoming Week
Looking ahead, several factors will influence the oil market:
Geopolitical Developments:
Gaza Ceasefire: Ongoing negotiations and potential agreements will continue to impact market sentiment.
Economic Indicators:
U.S. Data: Monitoring U.S. economic data and Federal Reserve announcements will be crucial.
China's Economy: Further insights into China's economic performance and oil demand will influence prices.
Supply and Demand Dynamics:
Stockpiles and Inventory Levels: Changes in global crude and fuel inventories will be key indicators to watch.
Seasonal Demand: The end of the summer driving season in the U.S. may affect refinery runs and oil demand.
Market Sentiment:
Investor Reactions: Market reactions to geopolitical events, economic data, and supply conditions will drive price movements.
We anticipate continued volatility with potential for further price fluctuations depending on geopolitical developments and economic data. For more detailed insights and personalised advice on managing your energy costs, get in touch with The Smart Energy Company. Subscribe to our blog for regular updates and stay informed about the latest market trends.
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