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Energy prices continue to reach record breaking values - 03-03-2022

Close price: Wholesale prices surged to never before seen valuations intraday, before settling at a lower but still eyewatering near 30% day gain for the gas market, with power not far behind, rising 25%.   

The ongoing conflict in Ukraine, repeated added sanctions against Russia and a rapidly rising oil market are pushing prices up. Adding to this is the fact its going to get very cold in mid-March as a late winter cold snap is due to grip the UK, with temperatures dropping as low as 8-10°C below seasonal norms.

We also saw Nord Stream 2 declare bankruptcy yesterday and comments from the German government that they wish to move towards LNG sourced gas, removing dependency from Russia. Two issues lie here. One, it may take some years to build more LNG terminals. The second is the LNG market is already highly competitive and will only add to the competition if Germany add to this.

Opening price: Prices are once again extremely volatile. At 08:40am we saw some record breaking valuations with gas going as high as 465p/therm. It has since come down to around the levels of yesterday’s close price, but it really is changing dramatically each hour. More companies around the world are ‘self-sanctioning’ Russia, including now gas & power traders which played into the morning run up. All eyes will be on talks held between Russian and Ukrainian officials later today.