Market Insight

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Mon, 12th Feb ’24


  • Demand is forecast to fall throughout the week (see chart).
  • Higher temperatures and wind outputs saw prices open lower this morning despite a marginally short UK system (demand outstripping supply).
  • Other key drivers remain bearish with Norwegian flows at capacity (no outages) and even higher temperatures expected as we approach the weekend.
  • Whilst geopolitical risk is stopping the markets from falling off a cliff, the impacts of Ukraine and Red Sea LNG transit problems on the supply/demand dynamic are evidently limited.
  • With Summer-24 now on the horizon (only 49 days away), historically high European gas storage (67% fullness versus the 5-year average of 54%) and weak demand (against a backdrop of favourable weather conditions) continue to weigh on prices.
  • Monthly Day-Ahead averages are on target this month (so far) to achieve 70p/therm (or circa. 2.4p/kwh).


  • In mid-Oct ’23, Summer-24 delivery was briefly more expensive than CAL25 (calendar year ’25 delivery) reflecting a spike in short-term risk-premiums (see chart).
  • This risk-premium has now abated, with CAL25 now at a clear premium to Summer-24 (though still at a discount to Winter-24), reflecting the market’s belief that Summer-24 delivery is now soft (and growing softer) and next year as a whole is likely to be less expensive than Winter-24 (until further notice!)
  • Looking to the continent, short-term delivery prices have received some support from weaker renewable production, constrained French nuclear availability, and cooler temperatures.
  • Conversely, the market is facing pressure from declining fuel and emissions prices.
  • A rebound of wind, solar and nuclear production expected in the coming days (combined with temperatures rising back up to nearly 8°C above normal by Thursday) will likely weigh on near-term delivery prices as the week progresses.
  • Down the curve, bearish sentiment continues to prevail amid sustained demand destruction and comfortable supply dynamics.
  • On the European/UK carbon markets, bears are holding their own versus dip-buyers, with compliance players (Industrial & Commercial) seemingly waiting for further price drops or gradually accumulating spot stock for future surrenders.
  • Compliance buyers’ volumes don’t provide enough support to halt the carbon prices’ downtrend – so expect more downside if gas prices continue their slide!
  • Back in the UK, our generation mix is very bearish with renewables contributing 50% and gas-for-power burn at 32%.
  • Monthly Day-Ahead averages for UK electricity are on target this month (so far) to achieve £59/mwh (or 5.9p/kwh).



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