What is happening in the energy market? - August 2022
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What is happening in the energy market?
The markets have been gaining with gas and power contracts jumping by 35% and 17% within a day following the natural gas flows from Russia via Nord Stream 1 being limited to around 20% capacity. This has forced Europe to seek additional reserves from Norway and to bid on LNG cargoes from Qatar and the US. Concerns over winter gas supply meeting the demand when the temperatures drop are driving the costs up, which is starting to impact 2023 and 2024 pricing as well as this year.
The heatwave due across Europe and the UK has caused a spike in the market which is limiting suppliers' ability to offer contracts that are valid for a long enough window for a customer to reach a decision and accept, as many are having to withdraw their pricing until there is some stability in the marketplace.
The surge in the market has left it highly volatile and the uncertainty around supply meeting the demand has been the main contributing factor pushing contracts prices higher. At the end of July, we were not seeing any relief in the markets until Summer 2024, when both gas and electricity were at 180.15 pence per therm and 180 pounds per MWh. However, pricing has increased so much so that for Summer 24 gas prices have increased by 41.5% and electric prices have increased by 24.2% and we now are not seeing relief until a whole year later in Summer 2025.
Bullish Factors (upward pressure on markets):
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Bearish Factors (downward pressure on markets):
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Article source: https://www.dhirubhai.net/company/fidelity-energy/
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