It's time to review your current deal now because World events can trigger another energy crisis, making today's low rates vulnerable.
As you can see from the below graphs we are in an exceptional place in the market. The market is near the levels seen at the start of 2021 before the energy crisis so has little room to come down further, pairing this with the cumulative 20%+ inflation since then in the UK there is little more movement if any.
In short, the market is in a great position, and we recommend securing now longer term as a 12-month contract poses greater risk and leaves you exposed to outside factors such as supply issues due to the ongoing situations in The Yemen, Russia/Ukraine.
With tensions further escalating within Iran and Israel, the market is currently in a wait-and-see situation to see what the long term effects on the market are going to be.
This further enhances the point that while the market is still in a good position, customers should be looking to capitalise before any potential major market movements occur.
A longer-term contract allows you to selectively choose when to next procure, if the market is lower next summer then we can capitalise on that and forward procure for another 12 months, and if the market is higher, signing until 2026 gives us another 12 months to monitor and identify the best time to buy.
This strategy both reduces your risk and exposure to the market but also provides budget certainty moving forward.
Market Update:
The European and UK energy market has been working effectively throughout 2024, with the forecasts suggesting the current pricing will remain at this level for the next 3 years, barring any escalation in infrastructure attacks.
In the gas market we are seeing a differential wholesale cost for 1 year and 3-year terms below 3%.
Prices have begun to rise over the last few weeks but are still in an extremely good place.
As things begin to escalate with Russia and Ukraine (with both sides targeting the others energy systems) and the recent geopolitical tensions between Israel and Iran, resulting in conflict in the Red Sea, making some oil tankers divert all the way around South Africa rather than the more direct route, we do have to be wary of prices increasing again.
Overall, prices are currently in a stable place and will hopefully stay at this level, unless there are any major outside influences impacting the market.
Today’s Session:
With temperatures much above seasonal norms and LDZ demand below averages, the UK system has opened long this morning. Feeding into the UK pipeline network also is an uptick in flow being observed via Langeled after Troll has returned this morning from an outage which was impacting 19 mcm/day.
LNG send out is also reduced down to 9 mcm/day. windspeeds are anticipated to be stronger for the first few days of this week, before dropping off from Wednesday. There is currently one LNG cargo due to berth at Milford Haven within the coming 8 days, whilst an abundance more is scheduled to arrive at North West Europe.
Over the weekend, operations in Rafah intensified after negotiations came to a standstill, also despite the US threatening to cease supplying weapons.
The concern is that the market and supply is in a fragile state and any impact will send prices up quickly. The key areas we are monitoring are:
1. Supply from USA and Norway, any distribution in these supply’s by logistics or sabotage from Russia
2. European nuclear reliance on uranium from Russia, we have seen Russia stop exports of Gas at their own economic cost and if they continued this with uranium it would cause a significant shortfall in European electric generation which would likely be picked up by burning gas.
3. Generation, wind and solar generation have been high across the UK and Europe year to date and it is impossible to forecast what this will look like in the latter half of the year.
4. Temperatures for winter 23/24, we enjoyed an above historic temperature this previous winter which relieved demand and cost.
5. The conflicts in the Israel/Iran/Gaza/Yemen regions, the location of these conflicts could lead to further disruption of the supply of LNG to Europe.
Our customers will also receive the below when they sign up through us:
Bill Validation - Send us your new bill and we will make sure you're being charged the agreed rates.
Structuring of co-terminus (common contract end dates) agreements if required (multi sites)
Proactive contract management - Making sure you never fall on to out of contract rates in the future.
Moves, adds and changes - We will manage any new meters install, changes of address or additional buildings.
Nobody knows the future events that might occur, what we do know is that you can turn an unknown variable cost into a fixed cost, securing yourself against excessive increases and giving you certainty in uncertain times.
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