May 2023 Energy Market BriefCalm Returns To The Market

May23 Business Energy Report

Annual Gas Prices

Annual Power Prices

In April, downward trends were observed, with the exception occurring at the beginning of the month – continuing the bearish wholesale pricing movements experienced throughout 2023 to date.

However, seasonal gas contracts from winter 23 to summer 25 were, on average, 9% higher in April when compared to the previous month – due to extensive maintenance decreasing Norwegian gas flows. This price rise offsets the previous five months of consecutive average losses for seasonal gas contracts. Winter 24 was the premium gas contracts, averaging 148.36p/th across the month.

As a whole, the first four months of 2023 have continued the trend of decreasing wholesale prices – a consequence arising from the mild winter 22-23 period experienced across the UK and north-west Europe, in which gas storage levels were bolstered to record highs for this period of the year at approximately 56% full at the time of writing.

Furthermore, the temperature profile across the spring 2023 period has been traditionally warmer than usual – easing gas demand and other fossil-fuelled emitters which are typically required to meet times of high requirements and end up as more expensive forms of generation.

Following the bearish sentiment set by its gas counterpart, on which its heavily influenced by, day-ahead power prices averaged £105.57/MWh across April, down 8.5% when compared to the prices observed last month. This loss can be attributed to the lowering of gas prices across the UK, coupled with strong easing demand levels, but it is important to acknowledge that losses were limited by a drop in wind generation levels when compared to March values.

A mixed trend was recorded across GB wholesale power prices, with front-month contracts undergoing a bearish sentiment as May 23 dropped 9.3% to £106.28/MWh, and June 23 fell 6.6% to £111.18MWh. However, seasonal power prices saw an upwards trend increasing 2% on average – with winter 23 becoming the premium market, standing at £158.65MWh, up 5.4% when compared to March.

Brent crude prices rose 6.4% to $84.07/bl, with prices reaching a four month high on 13 April, peaking mid-month at $87.15 before dropping off after. This came following the OPEC+ decision to cut oil output levels, tightening the global market, during a time of increasing volatility for the substance. Crude oil is sensitive to developments in financial and economic sector, with the supply cut price gains offset by a negative economic global outlook, and a firmer dollar countering investor optimism.

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