This Energy Market Update Newsletter aims to provide UK businesses with reasons for whole market volatility, with the ultimate aim of being able to purchase energy at the lowest price possible.
Both gas & electricity wholes prices rose significantly over the last week, driven primarily by news of damage to several of Ukraine’s power stations, and then subsequently the attack on Israel by Iran.
Additionally, colder weather in the UK and rising oil prices provided further bullish market sentiment (what does bullish sentiment mean?) to wholesale energy prices.
The below table provides a summary of the price changes to give you a steer on your potential renewal rates for Oct24 & Apr25 start dates.
|
15/04/2024 |
Variance over the last… |
||||
|
Gas |
indicative p/kWh* |
1 week |
1 month |
3 months |
12 months |
|
Oct 24 start date |
4.56 |
7.95% |
8.36% |
-12.26% |
-46.14% |
|
Apr 25 start date |
4.62 |
7.47% |
7.70% |
-12.54% |
-45.67% |
|
15/04/2024 |
Variance over the last… |
||||
|
Electricity |
indicative p/kWh* |
1 week |
1 month |
3 months |
12 months |
|
Oct 24 start date |
20.57 |
4.52% |
4.97% |
-4.30% |
-35.87% |
|
Apr 25 start date |
20.63 |
4.37% |
4.56% |
-4.25% |
-36.52% |
*Estimated renewal unit rates (including commodity and non-commodity costs, excluding CCL and VAT.)
Concerns of further escalation in the Middle East as well as continued attacks by Russia on Ukraine energy infrastructure weigh heavy on the minds of market traders. If by some miracle the issues are placated and tensions subside, we should see a decent retracement in pricing, as UK energy market fundamentals remain strong (what does market fundamentals mean).
However, I am not hopeful of a quick resolution to either conflict, as such I take a very risk averse stance on my recommendations this week.
Recommendations
- October 2024 Renewals- Risk averse buyers should look at purchasing their energy now. Risk takers should look at pricing early Q2, keeping an eye out for any further conflict escalations and moving quicker if needed.
- April 2025 Renewals – Risk averse buyers may wish to look at prices sooner rather than later (end of Q2/24) and take the value on the table if you have it. Otherwise, hang on until Q3.
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