Market Insight

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Wed, 28th Feb ’24


  • Month-Ahead delivery prices now sit circa. 33% above those printed in 2021, but 62% below 2023 and 74% below 2022 (see chart).
  • As predicted, UK gas prices began to retrace/correct from oversold levels this morning – supported by higher heating demand amid lower temperatures.
  • The UK system was short for much of the day on Tuesday (demand outstripping supply), so relied in part on storage withdrawals.
  • However, European storage remains at 63% fullness versus 5-year average of 50% (with only 32 days of Winter-23 remaining).
  • A small outage at the UKCS (Continental Shelf) lowered flow today but is expected to be short-lived.
  • Wind outputs are picking up and should extend into the weekend.
  • Russia announced a halt of petroleum products beginning March (which tallied with OPEC+ announcing they could extend supply cuts to support prices).
  • Not surprisingly, bullish momentum ensued with UK gas prices lifting circa. 2p/therm following the announcement.
  • Down the curve, contracts are trading sideways in the main.
  • On the supply side, Skarv gas field in Norway is undergoing unscheduled maintenance.
  • European LNG imports are predicted to double from 70 million tonnes per year in 2021 to around 140 million in 2030.
  • Increases in LNG demand are due to long-term sale and purchase agreements agreed for security of LNG (following Russia’s closure of Nordstream), as well as increased demand from China and other developing countries.
  • Looking at the bigger picture, only geo-political unrest poses any risk to a continuation of the prevailing long-term bear trend.
  • Monthly Day-Ahead averages are on target this month (so far) to achieve 63p/therm (or circa. 2.15p/kwh).


  • Looking to the continent, near-term delivery electricity prices inched down yesterday as an anticipated recovery of French nuclear availability combined with prospects of rising solar generation and milder temperatures.
  • After a slow bearish morning, the power curve prices posted substantial gains on Tuesday afternoon, buoyed by a steep rebound of gas and carbon prices on an extension of LNG facility outage and significant short covering in the emissions market.
  • Prices extended their upward correction this morning, again supported by a downward revision of temperatures and wind generation forecasts for early March.
  • Comparing EUAs and UKAs (European carbon versus UK carbon), UKAs appear to have plateaued in and around £35 to £40/tn – whilst EUAs continue to fall, reducing the relative discount of UKAs to EUAs (see chart).
  • It seems likely that the counterparts are heading toward parity (following the disparity we’ve seen since UKAs launched in May 2021).
  • Nonetheless, keep in mind that fundamentally there is little reason for prices to go up at the moment and any rebound could turn out to be short lived.
  • Back in the UK, our electricity generation mix bearish in nature with renewables contributing 43% and gas-for-power burn at 31%.
  • 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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