Market Insight

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Thurs, 9th May ’24


  • Monthly Forwards for Winter-24/Winter-25 are sitting just below the psychological resistance level of 100p/therm, and are commensurate with achieved Monthly Day-Ahead averages for Winter-23 (see chart).
  • Markets have been NEUTRAL to BULLISH throughout the week – supported by geopolitical risk (Middle East/Ukraine), pressured by weak demand and increasing temperatures as summer conditions deepen.
  • Temperatures are above seasonal averages and are expected to stay that way over the weekend.
  • Whilst demand is weak and below seasonal norms, wind outputs are also weak (increasing reliance on gas-for-power burn) – so there’s not enough in the way of bearish impetus to take the market lower (yet).
  • Solar outputs are forecast to pick up over the coming days as sunshine looks on the cards.
  • As such, demand forecast is trailing supply and the UK system is “long” at the time of writing.
  • On the supply side, the UK is expecting 4 more LNG arrivals to degasify at ports before the end of the month.
  • Notably, Europe has proposed plans to sanction Russian LNG – further exacerbating supply anxieties.
  • In short, fundamental developments over the coming days should further relax the market.
  • Across Europe, several countries have national holidays today – so consumption should be under norms.
  • Monthly Day-Ahead averages are on target this month to achieve 74p/therm (or circa. 2.4p/kwh).


  • UKAs (UK Mandatory Carbon Allowances) remain in an upward price channel (currently around £38/tn), but have broken above overhanging trend line resitance over the last few days (see chart).
  • This move is bullish in nature and suggests there’s enough momentum in Carbon to achieve breaks to the topside.
  • For all heavy emitters, it’s worth noting that falling gas prices ordinarily come with higher emissions values (as gas becomes a more attractive fuel to burn).
  • Of course, the greater need for thermal generation emits more carbon, so “compliance buyers” are driving the newly found momentum in both European and UK Carbon prices.
  • Looking to Europe specifically, a continuation next week of cold weather patterns (in certain areas) will likely continue to stimulate price.
  • Our electricity generation mix is bearish in nature today with renewables contributing 37%, thermal at 17% (gas and coal) and low carbon at 28% (nuclear and imports).
  • Monthly Day-Ahead averages are on target this month to achieve £73/mwh (or 7.3p/kwh).
  • Notably, Monthly Day-Ahead averages for the month so far are well-above prevailing offers for Month-Ahead (June) at £68/mwh (or 6.8p/kwh).
  • A confirmation surely that market participants see more risk in Day-Ahead (short-term) than Month/Quarter-Ahead (mid-term).



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