Tritility Energy News 09/12/19
Tritility Energy News is our fortnightly report which provides an insight to all the latest news and trends in the energy industry. We also include how this affects energy prices for your business and our predictions for the future.
- Tensions increase in the European gas market as Russia claims Ukraine’s transit tariffs are unacceptable.
- Donald Trump has backed protests in Hong Kong, adding further pressures to the US and China trade conflict.
- Forecasts show above-average temperatures in the UK throughout December.
Gas storage levels were looking healthy as we head into the Winter. There was an 8% increase in LNG in week 48 plus another 17 tankers have recently been confirmed. This high supply should prevent price increases when there is greater demand.
Earlier forecasts for week 50 showed temperatures falling below average however recent predictions suggest it will be warmer throughout the month. We can expect to see a sharp temperature drop for the 17 Dec before rising again throughout the week. Unless we see a dramatic change in December temperatures – which can never be ruled out – gas prices shouldn’t see an increase until the new year. Discounts are also generally applied for over the Christmas holiday period, due to demand falling considerably.
Russia and Ukraine are believed to still be in discussions over a new gas contract. With most of Europe’s gas from Russia travelling through Ukraine, tensions are running high in the European gas market. The existing contract expires on the 31 Dec, but Ukraine is supposedly ready to stop gas transportation through Ukrainian territory if the new contract is not agreed. On Wednesday (4 Dec) Moscow claimed the ‘transit tariffs proposed Ukraine to ship Russian gas through its territory next year were unacceptable and too high.’ – Reference euractiv.com. Kyiv has since dismissed these claims. As time is now running short, we should expect to hear the outcome later this week.
Power and Wider Fuels Summary
The US and China trade war gave the Oil markets some bearish momentum in week 48. President Trump confirmed the US would support Hong Kong against China and signed the Hong Kong Human Rights and Democracy Act, passing the bill into law. As a result of this Brent crude futures fell 1% on 28 Nov. The Chinese have since actioned several sanctions on US businesses, fuelling the trade conflict.
Week 49 sees wind generation remaining 20% above average to limit gas-for-power demands. In contrast, week 48 saw the UK gas network open short again after below-average wind generation caused demand to rise. Above-average wind generation on 28 Nov failed to prevent the UK gas network running short, despite demand out turning below the average.
While reasonable measures are taken to ensure the information above is from reliable sources, we cannot guarantee complete accuracy. Views expressed are solely those of the author, not Tritility, and are subject to change without notice.