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Energy Market Trends: February 2024

28 February 2024

Our Market Analyst & Energy Trader, Jitesh Panchal breaks down the market factors that have influenced gas and electricity prices across February, crucial reading for any business exploring energy procurement.


UK gas prices continued their bearish trajectory, with the front seasonal contract shedding a further 25% value. This is linked to demand weakness while Norwegian imports fluctuate above the 10-day average and high gas inventories. High influx of LNG also continues to arrive with the U.S has accounted for 50% of total European LNG imports as the ongoing constraints at the Panama and Suez canals have led sellers in the U.S to favour sending their cargoes to Europe rather than Asia. Russia account for 18%, Alegria 13% and Qatar has only accounted for around 5% of European imports. LNG prices have reduced by $0.50/MMBtu to $8.30/MMBtu over the previous week on sluggish demand and healthy inventories amid Freeport train 3 remaining under maintenance. There has some price retracement this week on recent cooler weather conditions leading to additional domestic heating requirement and storage withdrawals. European gas storage levels are 64% full, keeping well above the 5-year average with potential for storage levels to be 51% full by end of March.

Oil prices remain rangebound as continued geopolitical risk is somewhat offset by fading hopes of imminent interest rate cuts in the US. Inflation is still hovering above the Federal Reserve’s 2% target and the US economy has shown resilience following rate hikes. Higher-for-longer rates could dampen economic growth and suppress demand for oil. . Elsewhere, OPEC+ will plan in March on whether to extend voluntary production cuts to bolster prices. Concerns over Chinese demand is abating, as refineries continue brisk buying in the physical market after a boom in Lunar New Year travel. Russian authorities announced a six-month ban on gasoline exports from 1st March to compensate for rising demand and to allow for refinery maintenance.


UK power prices continue to trend in line with gas and carbon markets with the front seasonal contract shedding 19% this month. The latest weather runs show erratic UK temperatures for the coming weeks. Milder temperatures are now expected from early to mid-March before temperatures 1-2°C below normal are expected for the second half of March. The supply picture remains healthy for the period with wind output hovering around average and UK nuclear output improving. 58% of UK nuclear capacity is now online with a further 2,350MW expected back online by mid-March, taking online capacity to over 90%. French nuclear output also remains healthy at 72% as two reactors have gone offline for planned maintenance. Negative spark spreads also continue to add further price resistance.

EUA prices hit 31-month lows last week as warmer spring weather is expected over Europe in the coming weeks and industrial demand remains low. The highest open interest in put options is at €50/tonne which could provide some price support. UKA prices continue to hover close to record lows but support could be provided by cooler temperatures and the lack of auction this week. DNV has reported that the UK is set to miss it’s 2023 and 2050 emissions targets. The organisation blames slow progress with renewable energy installations, electric vehicle uptake and gas to power heating conversion.  

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