UK Energy Market Summary to Friday 17th June 2022

Closing prices 17.06.2022

UK Gas & Electricity markets

Last week saw volatility return to short term contracts initially due to a reduction in flows through the Nord Stream 1 pipeline from Russia to Europe.  In addition to this on Wednesday it was announced the Freeport LNG terminal in Texas is likely to be only partly operational for the rest of 2022 meaning a potential reduction of LNG cargoes to UK and Europe through the rest of 2022.

British near-term gas prices skyrocketed on Friday, with NBP spot trading 67% higher at 5.1p/kWh amid reduced flows on the Nord Stream 1 gas pipeline between Russia and Germany, 55% lower than the same time the previous week. Along the forward curve, the gas price for Winter 2022 fell by 8% to 9.9p/kWh, tracking bearish oil and carbon prices.

Despite volatility in markets for delivery over the next 9-12 months, markets beyond this remained relatively stable last week closing at similar levels to the previous week as summarised below.

Other energy market news

Crude oil prices fell to a four-week low on Friday, as central banks in the US, UK and Switzerland raised interest rates to combat hiking inflation, sparking fears of a global economic recession. Hence, Brent crude dropped by 5.6%, to settle at $113.12 a barrel on Friday. U.S. WTI crude slumped by 6.8%, to settle at $109.56 a barrel.

European carbon prices lost ground on Friday, tracking the gas price movements, with the traders eyeing further gas price volatility as the key market driver. EUAs expiring in Dec-2022 slipped by 0.8% to 82.37 EUR/MWh.

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