State of the Energy Market – 28th April 2022

Daily Updates

A very interesting day of trading has seen prices fall across the board on Wednesday, 28th April. Amidst the backdrop of Russia turning off the gas taps to Poland and Bulgaria, sharp increases to prices are expected, however the abundance of gas arriving in Europe this month has led to May and June 22 falling quite sharply. Power prompt prices fell by more than £20 per MWh at one stage and gas fell by more than 20 pence per therm. Further out in the curve, all prices also dropped but by more modest levels compared to prompt prices. LNG deliveries to Europe have reached a new record with over 10 million tonnes landing so far during April. These large volumes have helped European gas storage reach 33%, having started the month at 27%, and seeing us well placed towards the 80% levels required by 1st Nov 22, which is the target set in the latest EU directive.

Gas

May 22 wholesale gas prices closed at 149.64 pence per therm on Wednesday (27th April), which was a 8.5% decrease on the previous working day.  

Electricity

For the first time this year, wholesale electricity prices for May 22 closed at £171.50 per MWh, which was a 4.7% increase on the previous day.

In other energy related news:

  • In addition to the large volumes of LNG reaching Europe, another factor that is helping to push wholesale prices down is that allegedly, 10 European countries have signed up to new accounts with Gazprombank, the new entity set up by Russia, which will facilitate the payments for Russian gas from European countries in roubles. It is reported that four of these countries have already carried out initial transactions. If proven to be correct, this leaves 13 countries to go as Russia has been supplying gas to 23 European countries.
  • Gazprombank has refused to take payment for a German trading entity for gas deliveries in April and May. The German state took control of Gazprom Marketing and Trading Ltd (GM&T) to secure supplies from Russia and is currently going through a rebranding exercise so it can shed the Gazprom name.  The refusal of the payment, even though the payment was being made in roubles, could signal that Russia will be challenging the confiscation of their entity from the German state.
  • The UK energy supplier Drax, the owner of Opus and Haven, have confirmed that the UK government has asked them to hold fire with the intended closure of two coal power plants. The plants in Selby, Yorkshire were originally due to have closed in March this year but the closure dates will be extended by at least 6 months to help with the UK’s energy security during this time.

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