UK Energy Market Summary to Friday 29th July 2022

Closing prices 29.07.2022

UK Gas & Electricity Markets

Poor liquidity and nervousness of supply security through winter saw more volatility in UK and European energy markets last week. Gazprom announced that flows via Nord Stream 1 were going to be cut further, down to 20% of its capacity.

In an effort to increase EU security of energy supply, member states today reached a political agreement on a voluntary reduction of natural gas demand by 15% this winter. The Council regulation also foresees the possibility to trigger a ‘Union alert’ on security of supply, in which case the gas demand reduction would become mandatory.

Britain’s largest gas storage facility, Rough could start storing gas this winter to alleviate the pressure from a potential energy crunch, this could add value to summer 2023 contracts.

Following the volatility during the week, the NBP spot gas price dipped sharply by 24.6% to 9.0 p/kWh on Friday as UK’s gas system was balanced with Nordstream stable flows. The price for Win 2022 delivery fell by 4% to 15.3p/kWh. Long-term gas prices remained high (summarised below), due to fears that Russia will further reduce supplies to the rest of Europe due to the war in Ukraine.

Other Energy Markets

Oil prices rose on Friday as attention shifted to the OPEC+ meeting this week and waning hopes that the producing group increasing supply soon. Thus, Brent crude oil price settled 2.7% higher to $110.01, WTI crude rose by 2.3% to $98.62 per barrel.

On Friday EUAs expiring in December 2022 fell by 0.5% to settle at 78.55 EUR/tonne, but they still maintained above a technical support while energy markets slowed after yesterday’s significant gains.

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