Daily Updates
Tuesday’s (27th April) prices have been dominated by the news that Russia had turned off the gas taps to Poland and Bulgaria for failing to make payments in rubles as per the instructions that Russia had released a few weeks ago. May 22 power prices have been slightly up, whereas gas prices for May 22 have surprisingly dropped by approximately 5%. Further out, most periods are generally showing increases against Monday’s close for both gas and power. Russia continues to put a lot of emphasis on the fact that they have always honoured their contract commitments to their European counterparties. By switching off the taps to Poland and Bulgaria it demonstrates that they mean business regarding payment for gas deliveries to ‘unfriendly countries’ in rubles and the question now is, will they be prepared to do the same with Germany? Poland and Bulgaria have been preparing for such an eventuality, especially Poland, but is Russia prepared to turn down the billions of euros they currently receive from Germany by disconnecting the supply to them as well? UK LNG prices maintain a premium over East Asia for the next two months, which should continue to draw further LNG volumes to the UK, and will add to what is approaching record levels of LNG deliveries for April.
Gas
May 22 wholesale gas prices closed at 163.56 pence per therm on Tuesday (26th April), which was a 6% increase on the previous working day.
Electricity
Wholesale electricity prices for May 22 closed at £163.68 per MWh, which was a 1.1% increase on the previous day.
In other energy related news:
- The UK has imported approximately £220 million worth of Russian oil since the start of the war with Ukraine began in February. Although the UK has banned any cargoes of Russian owned ships from British waters, Russian oil has continued to make it’s way to the UK from different parts of the globe, e.g. Panama.
- The German government is considering taking measures to ensure they have the power to seize ownership of energy companies in the event of a national energy emergency, in effect renationalising energy companies in times of crisis. The proposal has been approved for the next stage of review and will be voted on at the Bundestag next month. If successful, it will be interesting to see if the UK will follow suit.
- April has been a bumper month for LNG shipments to the UK and with this expected to continue into next month and possibly June, we could soon face the challenge of having too much gas to be able to handle. Since the closure of the Rough, which was by far the UK’s largest gas storage facility, in 2017, the UK has very limited levels of gas storage and although we export gas through interconnectors to Europe, there is a limit to how much can be exported at any one time. It will be interesting to see if we end up having to turn away shipments of gas during the energy crisis we are currently experiencing.
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