The rally paused this week, but storage is still the lowest for the time of year on record.
Summary:
Gas and power prices eased for the first time since early August, giving the market a breather after weeks of sharp rises. Underneath that calm, European storage is at a record low for the time of year, so the pause doesn’t mean the risk has gone away.
What happened:
The rally finally paused. Monday’s spike took both curves to their highest since early 2023, but the risk premium unwound over the following sessions and the week ended with the first weekly fall since early August. Markets opened sharply higher, with Saudi Arabia’s main crude export pipeline reportedly still shut after the previous week’s drone attack, fresh reported attacks on shipping over the weekend, and stalled talks over the Strait of Hormuz. The mood then turned. Norwegian flows strengthened as the extended works at Troll and Kollsnes wound down, weather forecasts softened, and prices fell for three sessions running, pulling the curve back from near four year highs and taking day ahead power to a two week low late in the week. Friday clawed part of it back as Gulf tensions persisted, and strikes between the US and Iran have reportedly resumed around the strait, a reminder that the June memorandum is formally dead and diplomacy now rests with regional intermediaries. Storage remains the constraint under it all. European sites are around 69% full, the lowest for the time of year on record, Qatar’s LNG force majeure has reportedly been extended again into the autumn, and only weeks of the injection season remain. The twelve month gas blend closed at 172p, down under 1% on the week, with power around 2% lower at £137. A calmer week, but the curve is still pricing a winter with very little buffer.
What this means for your business
If you’re on a fixed contract
- Your current rate is protected, and this week’s fall doesn’t change that.
- Don’t read a calmer week as the risk easing. Storage is still at a record low for this point in the year, so renewals landing this winter are still going into a tight market.
- If you’re renewing over the next few months, use a quiet week to start the process rather than wait for a cheaper one that may not come.
If you’re on a flexible or variable contract
- This week’s fall is worth having, but the swings both ways show how quickly this market is moving.
- With record low storage for the time of year, a single supply disruption or a cold spell could reverse this fall quickly.
- Keep a clear view of your budget position and be ready to act if prices move again, rather than waiting to see what happens.
Get the full update
Download the full wholesale market update as a PDF for your records Rybeda 21st September Weekly Energy Market Update, or to share with your operations & finance team.
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