Business Renewals

Wholesale Energy Sept 2021 Q3 End Point

Wholesale Prices

The continuing increases in both wholesale gas and power markets are now causing major concern for many of the larger I&C users who have not fully fixed their forward tranches with day-ahead and near side curve markets forcing some of the smaller and unhedged suppliers into temporarily withdrawing from the market.  It is expected that we will see a large number of these suppliers stop trading completely unless there is a very sudden change in the markets, which is unlikely given the bullish sentiment.  On the plus side for those have the option to unhedge and sell-back there are some huge profits to be taken but for most energy users there is a need to be extremely careful when fixing/unfixing.

End point prices for electricity were as follows;

  • Apr 22 Annual – £82.85
  • Oct 22 Annual – £73.66
  • Apr 23 Annual – £65.70
  • Oct 23 Annual – £62.63

Nord Stream 2 submission to Germany was on the 8th September but it is expected to take up to 4 months to certify.

The outlook remains poor with very low LNG deliveries at South Hook and the fire at the UK/French interconnector all adding extra bullishness to a tight market with low reserves.  Above average temperatures and healthy wind generation has given some respite from the market highs we have seen recently.  Norway have agreed to increase flows by 1bcm for the calendar year and although we are expecting an increase in LNG deliveries these are likely not enough to put the flames out on market sentiment.

  • Day Ahead – 127.61p/therm
  • Q 22 – 129.75p/therm
  • Summer 22 Annual – 74.24p/therm
  • Winter 22 Annual – 78.36p/therm

The message from Busines Renewals is a recommendation to buy if your contracts are due in the next 6 months, if you are longer out then we would recommend waiting until the decision has been made on Nord Stream 2 (eta. Jan/Feb 22) when some of the risk premiums are likely to be factored out of both near and far side curves.

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