Name: ICD Energy Managers
Address: Q16, Quorum Business Park, Benton Lane,, Newcastle Upon Tyne, Tyne and Wear, NE12 8BX, United Kingdom
Telephone: 0191 215 5456
Price range: £££

Market Insight

Datasets reproduced in partnership with

Thurs, 18th Jan ’24

GAS

Markets have traded sideways today – it would be fair to say key drivers are well-balanced.
Notably, this month’s Day-Ahead average (so far) is at a significant premium to the remaining monthly Forwards of Winter-23, and those of Summer-24 (see chart).
Again, it would be fair to claim that monthly Forwards reflect market participant’s belief that the remainder of Winter-23 should pass without a hitch…
Norwegian flows remain at capacity and LNG arrivals are in rude health – offsetting any inevitable storage withdrawals.
Whilst it’s freezing right now, conditions are expected to warm up by the weekend.
Consensus is building that Europe will reach the end of Winter-23 with still over 50% of storage left in the tank.
Despite the cold spell, prices have remained under pressure given robust supply dynamics and historically high European storage levels.
By the weekend, warmer , wetter and windier conditions are likley to exert further bearish pressure with Summer-24 on the horizon.
Geo-political risk persists in the form of Middle East escalations and lingering worries over suppy disruption via the Red Sea.
Monthly Day-Ahead averages are on target this month to achieve 80p/therm (or 2.7p/kwh).

ELECTRICITY & CARBON ALLOWANCES

Looking to the continent for signals, short-term delivery electricity prices dived yesterday (alongside the gas and carbon markets) off the back of growing confidence that next week will bring wetter, warmer and windier conditions – limiting storage withdrawal and gas-for-power burn.
Whilst several Forward contracts are technically oversold, more downside is surely inevitable.
The likelihood of further downside is heightened if European demand remains subdued against a backdrop of improving renewables outputs.
Carbon is dropping off – pressured by the softening of the wider energy complex and speculators shorting the market.
Consensus is building that UKAs may go as low as £30/tonne next week.
Back in the UK, our generation mix is actually bullish at 53% fossil fuels (inc. 3% coal).
Monthly Day-Ahead averages are on target this month to achieve £79/mwh (or 7.9p/kwh).