August 2024 Energy Market BriefShorter durations recorded losses month-to-month

Contrary to the movements observed in the preceding month, and across most of 2024, power and gas contracts with shorter durations recorded losses month-to-month.

Despite the price losses, it is important to acknowledge that prices remain sensitive to change, especially as GB is more exposed to the global market for its procurement of gas. This was particularly apparent during July when Hurricane Beryl exacerbated supply fears for the West following an outage at the Freeport liquified natural gas (LNG) export facility in the US. Similarly, reduced gas supply from the Norwegian and UK Continental Shelf across various periods of the month further solidified concerns surrounding supply.

Day-ahead gas registered a 9.0% loss month-on-month to average 74.49p/th due to demand reductions as the higher temperatures limit total heating demand. Similarly, front-month contracts registered price drops, with August 24 seeing a 9.0% loss to 75.13p/th, and September 24 dropping 7.3% to 79.71p/th.

Similar to the front-month contracts, most seasonal gas contracts out to Winter 26 showed decreases, but we note outliers in the summer 26 and Winter 26 contracts which saw a gains of 2.0% and 2.1%, respectively. This led to an overall decrease of 0.1% across seasonal gas contracts, with an element of risk remaining across the medium-term as the present gas supply environment remains relatively uncertain despite elevated levels of EU gas in storage

Following the bearish pricing sentiment experienced across its day-ahead gas counterpart, day-ahead power prices fell 7.4% to average £70.14/MWh in July, falling to the lowest level seen since April 2020 at £17.26/MWh on 3 July following high wind generation and low system demand on the day. However, stronger losses were limited by a month-on-month reduction in wind generation levels, acting to increase the reliance on more expensive forms of power generation. Moreover, continued extensions to French nuclear power generation acted to decrease
interconnector flows from the country, in tandem with the maintenance across the GB nuclear fleet throughout the month.

Similarly, both front-month power contracts registered losses, as August 24 fell 9.3% to £66.87/MWh and September 24 dropped 7.2% to £72.33/MWh. Seasonal power prices saw an overall downward movement too – falling 3.2% on average, with winter 24 dropping 4.3% to £85.08/MWh and summer 25 falling 4.4% to £74.20/MWh.

Brent crude oil registered growth month-on-month, averaging $84.32/bl – up 2.0%. Prices found support as the market reacted to the arrival of Hurricane Beryl at the beginning of the month and the impact this would have on the Gulf of Mexico and the infrastructure in place. Moreover, data released by the EIA showed notable summer demand across the US following a notable drop in crude stockpiles, down 4.9mn barrels in the week commencing 15 July, and reaching the lowest level seen since February this year.