It’s another week and another set of record highs and extreme wholesale energy market volatility. The fundamentals are the same, the markets are still concerned about gas supply this winter.
Following a period of warm weather, the UK temperature has dropped below the seasonal norm and is predicted to stay cool through the first week of October.
The good news is that North Sea production has picked up with both the Norwegian and UK output returning close to normal capacity. The Russian gas flows to Europe are still below normal and no additional volume has been booked via Ukraine, despite the apparent capacity to do it. So, what’s going on here guys?
A big change since last week has been a substantial jump in prices, with significant increases in 4- & 5-year contract prices. However, the thought is that prices might start to level off, (but not come down) as it is hard to believe these rates are sustainable long term. However, there are plenty of supply issues that could further affect the energy market and if the cold snap continues this will also increase prices. I fully expect continued high volatility next week.