What has driven the energy market in the past few months?

Article posted

16th Aug 2022

Read time

2-4 min read


Mollie Pinnington

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Over the past few months, there has been a lot of volatility in the market. This has mainly been due to Russia reducing their gas supply to the EU and now the availability of French Nuclear power this winter is low and making things even more uncertain.

 As of now, prices for Winter are expected to reach £340/MWh but a lot has happened over the past few months that has gotten us to that point:

·         At the beginning of the summer months, Europe’s gas storage was filling up quickly, which was looking up for wintertime. There was strong support from Russia and LNG imports 

·         For the UK LNG prices have been trapped with a strong supply flooding into the country. The lack of storage has led to maximum interconnector exports to Europe, which has led the UK to trade at a sharp discount to Europe.

·         Coming more into the summer months Europe has seen issues due to Russia decreasing their gas imports to around 40% capacity, meaning that market prices spiked.

·         Fewer gas imports to the EU have led some countries to inject into their winter storage, adding risk to the premium for winter.

·           Now French nuclear concerns going into winter have increased risks for prices rising further.

 There is still a lot of market uncertainty going on with fears that Russia could completely cut gas flows to Europe. Volatility in the market is likely to stay for the foreseeable future especially as Russia continues to withdraw gas flow to Europe casing illiquidity. 

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