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  • Writer's pictureDean Kelly

Are energy prices finally back down to 2021 prices? See our latest insights and this is looking bright!

As you can see from the below graphs we are in an exceptional place in the market. The market is near the levels seen at the start of 2021 before the energy crisis so has little room to come down further, pairing this with the cumulative 20%+ inflation since then in the UK there is little more movement if any. In short, the market is in a great position, and we recommend securing now longer term as a 12-month contract poses greater risk and leaves you exposed to outside factors such as supply issues due to the ongoing situations in The Yemen, Russia/Ukraine.

 

Further to this a longer-term contract allows you to selectively choose when to next procure, if the market is lower next summer then we can capitalise on that and forward procure for another 12 months, and if the market is higher, signing until 2026 gives us another 12 months to monitor the market and identify an entry point to procure beyond.

 

This strategy both reduces your risk and exposure to the market but also provides budget certainty moving forward.

 

Market Update:

The European and UK energy market has been working effectively throughout 2023, with the forecasts suggesting the current pricing will remain at this level for the next 3 years. In the gas market we are seeing a differential wholesale cost for 1 year and 3-year terms below 3%.


Amidst the Red Sea escalation after the US/ UK carried out airstrikes in Yemen, LNG rates have been impacted through the conflict as a number of cargo ships that would previously travel the Red Sea to deliver goods are taking the longer route around the Cape of Good Hope, adding up to around 14 days delivery time. The number of ships traversing the Red Sea has dropped by more than 50% since the first part of December.

 

Today’s Session

 

The latest EC46 forecast show temperatures to be above SNT until 11 February, until they drop slightly below, LDZ forecasted demand is below normal with this current milder weather spell. Wind generation is expected to be above normal in the UK from tomorrow until the weekend. Storage across the EU is currently at 71.54% at the time of writing as per AGSI. The UK currently has eight LNG cargoes inbound in the next three weeks, with two expected today. Oil markets have been supported in the last few days on the back of geopolitical tensions in both the Middle East and the Ukraine war. Ukraine have been targeting oil facilities in recent weeks in Russia with drone attacks, which has the tangible potential to impact exports and as a result cause supply concerns.


The below link is a recently posted article around the expectations of the energy market going into winter 2023/2024.

 


The concern is that the market and supply is in a fragile state and any impact will send prices up quickly. The key areas we are monitoring are:

1.            Supply from USA and Norway, any distribution in these supply’s by logistics or sabotage from Russia

2.            European nuclear reliance on uranium from Russia, we have seen Russia stop exports of Gas at their own economic cost and if they continued this with uranium it would cause a significant shortfall in European electric generation which would likely be picked up by burning gas.

3.            Generation, wind and solar generation have been high across the UK and Europe year to date and it is impossible to forecast what this will look like in the latter half of the year.

4.            Temperatures for winter 23/24, we enjoyed an above historic temperature this previous winter which relieved demand and cost.

5.             The Israel/ Gaza/ Yemen conflict, the location of the conflict could lead to further disruption of the supply of LNG to Europe.

 

Our customers will also receive the below when they sign up through us:

· Bill Validation - Send us your new bill and we will make sure you're being charged the agreed rates.

· Structuring of co-terminus (common contract end dates) agreements if required (multi sites)

· Proactive contract management - Making sure you never fall on to out of contract rates in the future.

· Moves, adds and changes - We will manage any new meters install, changes of address or additional buildings. 



If any energy or utilities contracts are due for renewal are due in the next 3 months then get in touch for us to review provides quotes. Agreements can be signed now to secure the pricing in preparation for the expiry date.

 

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