UK Energy Prices Increase as Russian Invasion of Ukraine fuels fears of global shortages
February 24, 2022EU readies 195 billion euro plan to quit Russian fossil fuels
June 8, 2022
Closing prices 03.06.2022
UK Gas & Electricity Markets
Last week saw a three-day working week here in the UK with limited liquidity on Thursday and Friday. On Wednesday, UK NBP spot traded 22.9% lower at 3.4p/kWh due to weaker demand. Further along the curve, the gas price for Sum2023 delivery fell by 0.6% to 6.2p/kWh, following a temporary drop in oil prices.
Gas prices initially increased last week, driven by EU leaders’ agreement to impose a 90% ban on Russian crude oil imports by the end of 2022, fears of reduced Russian flows and increased gas demand with cooler and calmer weather here in the UK. Gas has accounted for over 50% of the electricity generation stack for the last week compared to an average of below 40% for the last year.
Bearish pressure on Wednesday saw returning Norwegian flows and an increase in Russian imports to Europe. Demand remains well above seasonal normal with the UK still experiencing cooler and calmer weather, with low temperatures and wind speeds driving domestic heating and gas for power demand.
The UK government also announced last week that they are exploring re-opening the UK’s gas storage facilities at Rough Field, in the North Sea to help manage future seasonal fluctuations on gas demand.
Other Energy Markets
Oil posted a sixth weekly gain after a keenly anticipated OPEC+ meeting delivered only a modest increase in output that failed to ease concerns over a widening supply deficit. Crude oil prices dipped on Wednesday, as Saudi Arabia declared it is prepared to increase its oil production if Russia’s supply declines significantly because of western sanctions. Brent crude fell by 5.3% to settle at $116.29 per barrel as a result.
On Thursday, the producer’s cartel agreed to a production hike, but it only amounts to 0.4% of global demand over July and August. A potential resurgence in consumption in China, the No. 1 crude importer, is now threatening to add even more upward pressure to prices.
European carbon prices continued to creep higher last week amid limited trading on Friday as attention was set to turn to this week to how the European Parliament will vote on reform proposals. The benchmark contract for EUAs last traded at EUR 87/t, 4% above where it settled Friday.
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The information in this document is designed to provide a high-level summary of energy markets. This information is not intended to be used for any procurement decisions.