Market Insight

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Wed, 24th Jan ’24


  • Notably, in-line with the onset of warmer/windier conditions, Day-Ahead prices have fallen back below Month/Quarter/Season-Ahead (see chart).
  • The divergence between short-term delivery and Year-Ahead is also growing more pronounced as we draw closer to summer conditioning.
  • Prices were up marginally at this morning’s open off the back of a slightly short system (demand outstripping supply) – though demand remains well below seasonal norms.
  • On the supply side, Norwegian flows have dropped off 7% and LNG sendout is a little below recent levels.
  • At the time of writing, near-term delivery contracts continue to drift northwards – most likely a natural correction of oversold conditions following days of bearish momentum.
  • Further down the curve, contracts are a little firmer this afternoon versus yesterday’s close.
  • Contributing factors (other than bears catching their breath) include Qatar delaying LNG exports to Europe in response to the risk to vessels traversing the Red Sea.
  • Monthly Day-Ahead averages are on target this month to achieve 77p/therm (or 2.6p/kwh).



  • Season-Ahead and 2-Seasons-Ahead have fallen uniformly since mid-Oct ’23 – reflecting an orderly return to summer/winter price variances (see chart).
  • Looking to the continent, European near-term delivery prices fell yesterday off the back of higher renewable outputs/temperatures, but were partly offset by expectations of temporarily lower French nuclear availability.
  • Prices today are finding support in forecasts of falls in wind outputs/temperatures – though both drivers remain above seasonal norms.
  • Following recent falls, electricity markets are starting to feel rangebound/balanced.
  • With strong gas storage and nuclear availability, weather remains the key driver at the moment – so expect pronounced reactions from market participants should forecasts be subject to changes.
  • Following losses over the past three weeks, carbon markets exhibit risk of a short-squeeze, given the net short position of speculators according to the COT (Commitment of Traders Report).
  • A short squeeze occurs when price moves suddenly and sharply higher, forcing traders who hold a sell position to quickly buy to cover potential losses – and in so doing, causing a trend reversal.
  • Back in the UK, our generation mix is very bearish – 52% renewables and 19% gas-for-power burn.
  • Today’s UKAs (UK Carbon Allowances) achieved an auction settlement of £32.61/tonne.
  • Monthly Day-Ahead averages for UK electricity are on target this month to achieve £74/mwh (or 7.4p/kwh).



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