State of the Energy Market – 30th May 2022

Daily Updates

The market started this week (w/c 30th May) continued the wholesale price increases we saw on Friday (27th May) with prompt prices up by 10% on gas on 6% on power. As the day progressed, these figures have been reducing. Trades dipped compared to the sharp increases seen earlier in the day, but the market is still expected to close up against most contract periods compared to the previous week.

Gas

June 22 wholesale gas prices closed at 153.36 pence per therm on Friday (27th May), which was an increase of 6.2% against the previous day’s closing price.

Power

Wholesale power prices for June 22 also increased by 5.3% to £165.61 per MWh against the previous day’s close.

The increases were driven by the reforecasting of upcoming weather to slightly cooler temperatures and the ongoing maintenance at Norwegian gas fields causing a reduction to gas flows reaching the UK

In other energy related news:

  • Austria’s Chancellor has warned Russian supplier Gazprom that they face potentially losing one of Europe’s largest gas storage facilities if they fail to properly use the facility in the coming weeks and months. Even though Gazprom’s supply businesses have been taken over by the German government (including the UK supply business), the Haidach gas storage facility is still under the control of Gazprom and it is currently sitting empty. Up to now, Gazprom have shown little interest in using the facility. Chancellor Nehammer has warned Gazprom that unless they start using it for the injection of gas in the coming months for use during the colder Winter months, it too will go the same way as the Gazprom supply business in Germany and the UK.
  • Rachel Reeves, Labour’s Shadow Chancellor, has visited the chemical company Solenis in Yorkshire and has seen up close the types of contract price increases that most UK businesses have been experiencing of late. ‘The annual price of energy for the firm has increased from £7 million to £35 million in the last two years because there is no price cap for businesses,’ she stated. ‘Other countries have stood behind their energy intensive industries, but the UK government has announced nothing for businesses, be they small high street companies or big businesses like this one who will have global competitors that have not experienced the same sort of increases seen here in the UK.’
  • The largest LNG unit has finally come back online after being out of action for almost 20 months. Equinor’s Hammerfest LNG unit in Norway suffered a fire in September 2020 and the unit has been closed ever since. Norway provides Europe with 24% of it’s gas, second only to Russia, which last year provided 43% of Europe’s gas. Hammerfest usually makes up 5% of Norway’s contribution and so the reopening of the facility has come at an opportune time for helping to add more gas into storage during the Summer months this year.

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