Professional Energy Services publishes weekly UK energy industry news. We keep you up to date on the latest energy market analysis, focusing on the gas, power, and oil markets, changes to legalisation, and industry updates such as noticeable company activities, and green news.
Quick market update starting from the beginning of August.
It’s been an extremely volatile month – we’ve seen fresh market increases, new record highs across the board not just in the UK but in Europe. We’ve extra focus on Germany who have come out in the last 24 hours to say that they’re not going to hit their 95% gas storage target for winter. This has obviously caused a lot of volatility in markets, this hasn’t helped with an unplanned Norwegian outage which has further contributed to price rising. At this point in time it’s difficult for any single business or domestic user to navigate the markets to their best advantage financially. There are a number of mechanisms however: we’re seeing a marked increase in the amount of commercial users looking to take the balance of month for those who qualify, we’re also looking at a marked change in business attitude towards energy consumption with some SME businesses looking to reduce their output, some smaller manufacturing looking to actually halve the size of their businesses to be able to get through this. I expect to see that that will be an ongoing trend where possible, but with prices at their current levels it’s hard to see how a lot of smaller businesses are going to be able to fully stomach these price rises with increases in excess of 400% in some instances. This makes the business, especially processed businesses in the SME sector, a lot more vulnerable to closure.
We will watch this closely over the coming weeks but every day so far there’s been significant pricing and a lot less pricing increases and a lot less liquidity in the market and so what that means is that without clear direction in regards to trades happening we’re just seeing a continual upward trend, we haven’t seen anything breaking this trend. We’re seeing regular five percent within day upward ticks in the market.
In regards to any bearish sentiments there are some bearish news stories out there: the fact that overall EU storage levels are looking strong, the fact that LNG is being sent from different areas of the globe over our way, but these are counteracted very quickly by the ongoing Russia-Ukraine situation and lack of flows from Russia to Europe in general, alongside rallying coal prices, as well as strong activity in the carbon space.
