June 2024 Energy Market BriefEnergy Markets Remain Nervous

Annual Gas Prices

Annual Power Prices

We are continuing to observe a bullish pricing environment compared to the beginning of 2024, where we saw notably low prices for gas, power, and wider international commodity markets despite representing the period of the year in which we would expect demand levels to be at their highest.

May saw yet another overall increase in wholesale price movements across tracked gas and power contracts, similar to the movements seen in March and April. However, the expectation is that this trend will likely subside into the summer months, acknowledging this typically represents the lowest demand period of the year, subject to any unforeseen events.

Seasonal gas contracts from Winter 24 to Winter 26 were, on average, 3.4% higher in May when compared to the previous month, but with Winter 26 the exception to this trend. Moreover, longer-term contracts found support as Austria’s OMV Group indicated that gas payments to Russia’s Gazprom may stop due to a legal decision, limiting supplies into Austria.

This acted to increase market speculation as to when these volumes may be terminated and the impact this could have on gas supply security across Europe as we move further through 2024 and the winter refilling window.

Due to the intrinsic link between gas and power prices, this bullish trend was extended to equivalent GB baseload power contracts – with day-ahead power prices averaging £71.82/MWh, up 22.2% when compared to April.

This gain is strongly attributed to the rise seen in its gas counterpart, in tandem with notably decreased wind generation production when compared to April levels. As a result, on 23 May, day-ahead power rose to £84.40/MWh, the highest seen since January 2024.

Similarly, both front-month power contracts recorded gains, as June 24 rose 8.6% to £68.99/MWh and July 24 averaged 9.8% higher at £70.96/MWh. Likewise, seasonal power prices saw collective upwards price movements, rising 5.7% on average. Brent crude prices saw a 6.4% decline month-on-month to average $83.15/bl as US inflation concerns outweighed tensions in the Middle East, in tandem with mild Chinese demand. Losses were capped, however, due to uncertainty surrounding another potential supply cut ahead of the next OPEC+ policy meeting on 2 June.

Elsewhere, LNG prices continued to rise, averaging 89.54p/th across May, and reaching the highest level seen since December 2023 on 24 May at 98.53p/th, as demand from Asian countries remained strong as high temperatures prompted greater cooling appliance demand.

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