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Energy Focus - August & Early Winter Energy Outlook

15 August 2022

Watch-on demand

Energy Focus: August & Early Winter Outlook

Our latest market update video provides the energy outlook for August, along with an initial view of the winter ahead.

Tridents Energy Risk Manager, Alexandra Mottershead,  talks through and highlights the key price drivers within the different energy markets. Read the full video transcript below. 


UK demand ticked up during July with temperatures sitting above the seasonal norm for most of the month. Increased cooling demand, a subdued renewable picture and European gas supply concerns have narrowed the spread between day-ahead and month-ahead pricing.

The demand picture for winter will mainly be driven by domestic demand for heating. Whilst weather forecasting may only give us an accurate temperature picture in terms of days, we can observe global climate phenomena to gain insight into what the winter months could bring. Current modelling shows a 60%+ chance of a La Nina event in the Northern hemisphere in early winter. Typically, La Nina years are associated with cooler weather conditions and increased snowfall in the Northern Hemisphere. We expect market reaction to cold weather to be even more exaggerated during winter 2022/23, given European supply concerns. There is potential for demand to be reduced, due to high prices, but cold weather will still result in demand pressures.

Beyond the usual winter stresses on the UK gas and power networks, we expect continental export demand to remain high during winter, which will add further pressure to the system.


The UK gas supply picture has remained healthy in recent weeks with continued LNG imports and strong Norwegian flows. Renewable generation has generally been just below seasonal normal levels.

There is concern that LNG imports into the UK could be slowing, with no arrivals yet scheduled for August. Strong competition from European and Asian gas hubs, coupled with the ongoing outage at the US Freeport LNG facility, is likely to remain concern going into winter.

Norwegian flows are expected to fall as we reach mid-August as the maintenance schedule picks up until the end of September. Norwegian gas remains a stable supply source for the UK, but any unplanned outages or strike action could result in significant upside during the winter months.

Between 1.1GW and 1.8GW of British nuclear capacity will be consistently offline for maintenance until the end of this year, adding further tightness to the winter supply picture. There is also increasing concern around the French nuclear fleet, an integral part of Europe’s power supply, as over half the country's reactors remain offline for maintenance or safety reasons.

Geopolitical Risk

European gas supply concerns remain the number one driver across the UK and European markets. Russia cut Nord Stream flows to less than 40% in mid-June, citing a missing turbine that had been held in Canada following maintenance work. The turbine is now on its way back to Russia but timescales, and whether flows will increase upon its return, remain uncertain. In recent days, Russia has announced Nord Stream flows will be reduced to just 20% of capacity as another turbine undergoes maintenance work.

Russian gas flows will remain a key risk factor throughout this winter. The fast-paced and uncertain nature of developments means significant risk premiums continue to be built into prices. Reduced flows, outages, or negative political developments, during the winter period, have the potential to cause price spikes that could far exceed those seen previously.

Wider Commodities

Rising global economic fears continued to mitigate upside price action, from a squeezing supply picture, to keep the wider commodity complex rangebound throughout July.

Global oil supplies are set to remain tight, especially given concerns around OPEC+’s capacity to step up production. Demand is forecast to surpass pre-pandemic levels in 2023, as China continues to ramp up consumption following multiple covid lockdowns. However, high prices, particularly on the back of the strong US dollar, coupled with global economic concerns will continue to moderate prices.

Similarly, economic concerns continue to cap demand-driven gains on carbon markets. If EU countries mandate demand reduction this winter, the economic impact on the Eurozone would be significant. However, as Europe continues to increase coal-fired power generation, to reduce reliance on Russian gas, prices could remain supported despite the downside provided by a weaker Eurozone economy.

Energy Outlook

What should customers do?

Adopting a long-term, flexible strategy remains the best tool to reduce the risk of purchasing at, or near to, market highs. Essentially buying little and often, over a large window of time, spreads risk. UK wholesale energy markets remain in backwardation, so longer-term strategies also allow consumers to take advantage of these conditions.  

For larger energy users, this can be achieved with a flexible energy contract and comprehensive risk management strategy. For consumers who cannot access stand-alone flexible contracts, Trident’s framework solutions provide a facility for purchasing energy flexibly with multiple strategy options for varying risk appetites.  

For those requiring fixed contracts, Trident would advise agreeing on these contracts as soon as possible. Market conditions remain extremely volatile, with very little chance of significant downside before winter. Extreme market conditions, coupled with the usual September rush, could result in suppliers being incredibly stretched, and some may even withdraw from pricing for periods of time as we get into September. A longer-term fixed price may provide a slighter more competitive price, due to backwardated market conditions, however, this option does require fixing during extreme market conditions, for a longer period. 

Trident is a specialist in all types of commercial energy. Speak to us today to see how our unique 360° service can benefit your business and individual needs by reducing energy costs and optimising energy efficiency. Call our experts today on 0345 634 9500 or email enquiries@tridentutilities.co.uk.

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Please call our team on 0345 634 9500 or email us at info@tridentutilities.co.uk.