State of the Energy Market – 1st July 2022

Daily Updates

Prices opened firm once again this morning (Friday 1st July), however they gradually proceeded to decline throughout the day, with most of the move seen in the prompt curve. 

In keeping with the robust LNG deliveries from last month, a record-breaking month of gas exports from the UK appears likely to be repeated over the July 22 delivery. Additionally, wind predictions for the upcoming week continue to keep steady at a level that is just above seasonal norm. Since markets are still moving in a bullish direction and the geopolitical risk premium is still being priced as a result of the revived Russian supply fears, optimism regarding fundamentals for the coming weeks are not having much of an influence on the sentiment of the curve.

Winter supply is still looking tight as we go closer to the Nord Stream 1 maintenance, and there are concerns about when it will resume operation. 


August 22 wholesale gas prices gas prices increased slightly by 1.4% to close at 248.3 pence per therm.


August 22 wholesale power prices also increased by 2% to close at £236.50 per MWh.

In other energy related news:

  • Following a very large tax bill from the Russian government, Gazprom has failed to pay its shareholders a dividend for the first time in almost 25 years. This follows more bad news for Gazprom that 3 LNG tankers have been seized in Germany for an ‘indefinite period’.
  • There have been a few rumors filtering through energy markets that Russia may refuse to switch back on the Nord Stream 1 (NS1) pipeline following a 2-week period of planned maintenance commencing on 11th July. NS1 has seen gas volumes transported from Russia to Germany drop by approximately one third a few weeks ago with Russia claiming that a compressor needed to restore full gas transportation was being held up in Canada due to sanctions against Russia following specialised repairs to the compressor. The Russian view has been rubbished by other European nations that believe Russia have deliberately reduced volumes through Nord Stream 1 in retaliation to some European parties refusing to pay for Russian gas in roubles. This, together with some energy sector strikes in France and Norway recently has led to an increase in Winter 22 energy prices. Given that Russia’s energy sector and finances have been decimated by sanctions from the EU, it is much more likely that Russia will turn the taps back on for NS1 following the period of maintenance as otherwise, the Russian economy would take a further tanking.
  • A report by Fuel Poverty Action (FPA) has found that 81% of those surveyed are in support of scrapping standing charges on energy bills. The average domestic bill contains a standing charge of 44p per day, which must be paid irrespective of whether a customer uses energy or not and covers the general infrastructure costs. The FPA has written to the regulator Ofgem to present their findings and to argue that the costs of the many failed suppliers from the last 12 months should not be included in standing charges for the suppliers that have not failed. Ofgem have recently stated that they are investigating whether standing charges in general can be cut.

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