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
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Market Insight

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Tues, 5th Nov ’24

GAS

Seasonal Forwards are down versus 1-week/1-month/3-months ago (please see chart below).
This morning, prices opened marginally up on yesterday’s close due to a short system (demand forecast outstripping supply) and news of Storm Rafael heading towards the Gulf of Mexico.
Poor wind outputs across the UK will mean storage withdrawals today to meet forecasted demand.
Temperatures remain on-track to stay above seasonal norms for the duration of the week, with wind speeds picking up from Thursday – so the start of next week should see a more comfortable supply-demand dynamic.
It’s voting day in the US – so expect volatility as the results drop-in, and for several days thereafter.
Trump will mean a change in energy policy, Harris’ approach will broadly retain the status quo.
European gas storage levels at 95% fullness (versus the 5-year average of 90%) continue to offset wintry bullish momentum.
Heading into Winter-24, LNG imports into Asia are falling, Europe’s are on the rise.
The UK’s gas will likely remain at a premium versus Europe as the winter progresses – we’ll need to bid high to attract the cargoes.
The premium is exacerbated by structural problems in the UK’s gas system resulting in high transmission costs and, of course, a lack of storage compared to Europe – meaning the UK needs to offer a much higher price to secure supply.
As a rule of thumb, UK gas prices ordinarily trade at a discount to European prices during the summer, but remain at a premium in winter when the infrastructure creaks.
Monthly Day-Ahead averages so far this month are on target to achieve 99p/therm (or approx. 3.378p/kwh excluding non-gas).

ELECTRICITY & CARBON

Looking to the continent, EUA (European Carbon Allowance) prices bounced yesterday mirroring gas markets.
The Dec’24 benchmark closed at €65.22/tn after gaining 2.11% (+€1.35/tn).
It seems gas traders evidently that the sell off due to the likelihood of the Ukrainian transit deal extension with Azerbaijani gas had been overcooked.
Wind speeds across Europe are expected to increase after 7th Nov amid temperatures dropping below seasonal norms due to the development of an Atlantic ridge, bringing cold air masses to continental Europe.
UKAs (UK Carbon Allowances) have yet to retest the lows of 8th Oct – currently sitting at £38.49 on the mid-price.
Our electricity generation mix is very bullish in nature today with renewables contributing 8%, thermal at 58% (gas and coal) and low carbon at 20% (nuclear and imports).
Monthly Day-Ahead averages so far this month are on target to achieve £104.032/mwh (or 10.4032p/kwh excluding non-energy)