Weekly Market Update Key Takeaways

What’s new in the energy market this week?

UK NBP Gas:

• The UK continues to attract LNG cargoes amid weak Asian demand and a lack of major facility outages which are keeping global production levels.
• After the EU renewed their sanction package, they have decided not to include Russian LNG to try and help maintain supply security.
• The EU have removed the energy price cap, which indicates that the worst of Europe’s energy crisis is over.
• Trump has imposed tariffs on Mexico, China and Canada. These have come with suggestions that the EU may also face similar measure’s, causing some market uncertainty on prospects of supply chain disruptions.

UK Baseload Power:

• High Norwegian hydro, with surplus expected to double in February, could help supress prices throughout summer on improved power export prospects.
• Talks of linking the UK and EU ETS (Energy Transmission Schemes) could help mitigate the impact of the EU CBAM (Carbon Boarder Adjustment Mechanism) while also enabling UK energy producers to access EU markets more freely.
• The UK government plans to align the UK ETS with the more expensive EU ETS scheme, which is expected to keep power prices elevated on increased carbon costs.
• The Norwegian governments new fixed price power policy is expected to come into effect in October and could cause wholesale market volatility as it reduces incentives to save power when prices are high.

Energy Market News:

• The main reason for linking the two ETS schemes together is to mitigate any issues related to the UK and EUs CBAM’s, with an equivalent carbon price allowing UK energy and goods producers to sell in European markets without submitting carbon permits.
• The scheme’s linkage has wide support from industry groups. Linking the two schemes would be bullish for UK carbon and bearish for EU, with the EU trading at a £20-35 premium in recent weeks.

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FAQs:

What is NBP gas?

• NBP gas is natural gas in the UK that is traded within the National Balancing Point.