Market Insight Report Wholesale Energy Prices
April 2024
In previous years oil and gas facilities were affected by the Russia-Ukraine conflict causing supply issues throughout Europe. Natural gas demand in Asia increased as a direct result. While conflict continues, there is still uncertainty about the geopolitical condition of the market.
January to October 2023 trends
- Prices dropped in early June
- Fluctuated between late June and early October
- Rose by 30% by mid-October
2024 Energy Prices
In the Q1 2024 (January to March) wholesale energy markets declined versus previous figures 1. Less energy was bulk purchased and sold between suppliers and generators as worries of a chilly winter cooled down.
UK and European energy markets are reacting with risk premiums. These are high returns which compensate for an increased level of risk. For a short time, energy prices fell by 30% then rose again. The market quickly realised the probability of conflict lasting longer than expected making global energy supplies much more vulnerable to attack.
Limited gas supply in Europe
The LNG (Liquified natural gas) market plays a key role in setting the price of gas in Europe.
Exports of gas coming in from the US into Europe dropped as the demand in Asia rose. The Middle East has also been drawn to Asian markets because there is less risk transporting cargo. This has meant that gas imports to the UK fell by 44% in comparison to the year before 2.
In the face of limited gas supply and 22 unplanned gas outages across European facilities 3, European storages are doing relatively well. These storages are, on average, 47% more full than the past 3 years 4.
Ultimately, future energy prices have risen due to the ever-changing geopolitical state of conflict zones. So far, the forecast for gas market prices for Q2 2025 has an 11% premium compared to the same quarter in 2024 5.
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