Market Insight

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Thurs, 1st Feb ’24


  • Looking down the curve, the divergence between gas and electricity risk-premiums grows increasingly evident m-o-m (with only 59 days of Winter-23 remaining) – see charts.
  • Prices have spent the last few days unwinding/correcting following a sustained bear rally over the preceding weeks.
  • At the time of writing, near-term delivery prices are marginally down on the day despite a short UK system at this morning’s open (demand outstripping supply).
  • European Industrial demand destruction persists with consumption predicted to be about 22% lower than seasonal averages – coupled with a circa. 10% decrease in European gas production y-o-y.
  • European storage is at 71% versus the 5-year average of 55%, reflecting limited withdrawals over the past few weeks.
  • All in all, a quiet day on the markets with prices consolidating sideways.
  • Confidence in storage levels pervades underlying sentiment with consensus building that European storage will end Winter-23 with more than 50% still left in the tank.
  • The Freeport LNG terminal in Texas expects Train 3 to be out of service for about a month due to an electrical fault.
  • Geo-political risk persists in the form of Middle East escalations and lingering worries over supply disruption in the Red Sea/Suez Canal (limiting downside).
  • Favourable weather conditions into early February are expected to keep a lid on any sustained bull-run.
  • Monthly Day-Ahead averages are on target this month (so far) to achieve 74p/therm (or circa. 2.5p/kwh).


  • Looking to the continent, near-term delivery prices are down on the day.
  • Temperatures are high this week – between 3°C and 6°C above seasonal averages, suppressing demand.
  • Wind outputs look high for the weekend, with chances of negative prices intraday on 4th November with residual loads (total load minus renewables generation) expected to be nigh-on zero.
  • Down the curve, the bear rally has lost steam and market participants are likely looking to fuels for direction.
  • On the carbon market, the situation appears similar as on the power side – a risk off (reducing exposure to protect capital) is still a possibility, though technical momentum indicators are pointing northwards reflecting an unwinding of oversold conditions – so further downside still looks likely in due course.
  • Back in the UK, our generation mix is bearish – 43% renewables and 25% gas-for-power burn.
  • Monthly Day-Ahead averages for UK electricity are on target this month (so far) to achieve £62/mwh (or 6.2p/kwh).



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