State of the Energy Market – 28th March 2022

Daily Updates

This week started with both gas and power markets now trading up on Friday’s (25th March) close, with gas for April 22 currently up by 7% and power for Apr 22 currently up by 5%. Temperatures are due to fall from the middle of this week onwards to below seasonal normal levels, so we could even see snow in some parts of the country. Wind levels are also a little below normal. In addition to these two factors, it seems that the initial upbeat market reaction to Joe Biden’s announcement on Friday to provide more LNG cargoes, has now worn off and the realisation has set in that a lot more LNG will be required to replace the current supplies received from Russia.

Gas

On the back of the announcement that the US had struck a deal to supply extra LNG supplies to Europe, wholesale gas prices fell during the day on Friday (25th March) with April 22 closing at 236.61 pence per therm, down 11.9% on the previous day’s close.

Electricity

Wholesale power prices were also down on Friday with April 22 closing at £210.13 (25th March) which was a drop of 8.9% compared to Thursday’s close.

In other energy related news:

  • National Grid has sold off its 60% stake it held in UK’s gas transmission and metering to a pair of fund companies, Macquarie Asset Management, from Australia, and Canada’s British Columbia Investment Management Corporation.  The move will be worth a total of £4.2 billion to National Grid who have defended the sale by saying that the new funds will be used to transition away from gas towards electrifying the UK network. However, the move is being criticised by some who see it as another valuable asset that is no longer under UK ownership.
  • So far this month, we have seen 20 LNG cargoes arrive in the UK and we expect a further 6 before the end of the month.

Get in touch with us to see how your costs will be impacted – We can help you find solutions to mitigate against this.