The news that the Freeport LNG facility in Texas will reopen in 3 months instead of the initially anticipated 3 weeks led to the increase in prices we saw on Tuesday 14th June and saw further increases at the open for both gas and power on Wednesday (15th June).
As the day has progressed, prices started to settle but the market was expected to close up against yesterday’s close by at least 15% for gas and less so for power. Prices also increased on the back of the news we reported on Tuesday (14th June) regarding the reduction of Russian gas volumes being transported to Europe. A compressor being used on the Nordstream 1 pipeline needed specialist repairs, which could only be carried out in Canada. The repair was carried out but the compressor is now held up and is not currently signed off for transportation back to Russia due to the existing sanctions.
Wholesale prompt prices for gas and power both increased on Tuesday, 14th June.
July 22 wholesale gas prices rose by 28% to close at 196.55 per therm.
Wholesale power prices increased by 17% and closed at £190.44 per MWh.
In other energy related news:
As part of a package of ‘urgent’ electrical market reforms, the UK government could disconnect energy bills from wholesale gas and electricity markets. Over the summer, it will hold consultations on a variety of potential reforms, including the separation of zero marginal cost generation from the wholesale market. This could have a big impact on the future of UK contracts so we will report further on this once we have any further details.
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