In August 2024, UK energy markets saw rising gas and electricity prices due to global tensions and high demand. While geopolitical risks drive short-term volatility, longer-term contracts offer potential savings as prices vary with market conditions. Here is a breakdown of the key highlights from each week in August:
Week of 5th of August 2024: Global Tensions Drive Price Surge
UK energy prices rose sharply due to increased LNG demand in Asia, spurred by heatwaves in Japan and South Korea, and escalating tensions in the Middle East. Despite these spikes, signs of market correction emerged, with small supply contracts advised to secure deals now, while larger ones may benefit from holding off. The UK secured its first LNG cargo for September, and Freeport LNG returned to full operations, improving supply.
Week of 12th of August 2024: Volatility Amid Geopolitical Uncertainty
Prices remained volatile due to continued geopolitical risks and high Asian LNG demand, limiting European supply. However, strong European storage levels and weakening Asian demand could stabilise prices. Electricity prices rose more slowly than gas. Buyers should consider securing longer-term deals amid ongoing volatility.
Week of 19th of August 2024: Market Stabilises After Weeks of Increases
After weeks of rising prices, the market began to stabilise, supported by strong supply fundamentals despite ongoing geopolitical risks. The gap between short- and long-term contracts narrowed, making longer deals more attractive. Buyers should be aware of Third Party Charges (TPCs), which could impact overall costs, and consider splitting out wholesale energy elements from other charges.
Week of 26th of August 2024: Market Balances Despite Persistent Risks
Following a brief dip, prices stabilised again, influenced by persistent geopolitical risks. The value gap between short- and long-term contracts narrowed further, with 36-month deals offering good value. Robust storage levels and additional LNG capacity from the US support supply, but buyers should remain cautious, considering TPCs and market volatility.
Concluding Thoughts: Adapting to Market Realities
August 2024 saw volatility in UK energy markets due to global tensions and fluctuating LNG demand. While prices surged short-term, market stabilisation is emerging. Buyers should consider longer-term contracts as Third Party Charges grow. Strategic decisions are key.
For further insights and information on the dynamic landscape of the 2024 energy market, feel free to contact us:
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