Four weeks of rising prices. 12 month gas is at its highest since December 2022. If you have a renewal coming up, here is what you need to know.
The week in brief
- Wholesale gas and power rose for a fourth week in a row.
- Reports suggest the conflict in the Gulf has spread to Saudi Arabia.
- EU gas storage is around 75% full, well below the usual level for late October, and barely rose this week.
- By Friday, the 12 month gas price was at its highest since December 2022 and the 12 month power price at its highest since February 2023.
Market commentary
Wholesale gas and power rose for a fourth week in a row as reports suggest the conflict in the Gulf has spread to Saudi Arabia. Supply risk stayed at the centre of the market.
European gas briefly reached its highest level since December 2022 on Tuesday before easing into the close. Prices turned higher again from Wednesday, when the US reportedly ordered staff not needed for emergency work to leave Saudi Arabia. This followed almost daily Houthi attacks on the kingdom, including on airports and other key infrastructure. Prices kept climbing and ended the week at their high.
LNG from the Gulf remains far below normal while shipping through the Strait of Hormuz stays restricted.
EU storage is around 75% full, well below the usual level for late October, and has barely risen this week. Forecasters expect colder weather from the end of the month, which would push up heating demand on already low stocks.
UK power followed gas higher, as gas fired plants still usually set the price of electricity.
By Friday’s close, the 12 month gas price was at its highest since December 2022 and the 12 month power price at its highest since February 2023. With the market this sensitive to news from the Gulf, prices are likely to react quickly to each new development.
What this means for your business
No one can tell you where prices go next. What you can control is how exposed you are and when you make decisions.
If you are on a fixed contract
Your unit rates are locked for now, so this week’s rise does not change your current bill. It matters at renewal.
- Check your contract end date and notice period today.
- If you renew within the next 6 to 12 months, start comparing options now rather than in the final weeks.
- Fixing early is not always cheaper. Prices can fall as well as rise. The right timing depends on your budget and how much risk your business can carry.
If you are on a flexible or variable contract
Wholesale moves reach your costs faster. Four weeks of rises feed through more directly.
- Find out exactly how your price is set and how often it changes.
- Check whether your contract lets you fix part of your volume at set trigger points.
- Ask whether fixing some of your winter usage would give your budget more certainty. This depends on your appetite for risk.
Questions worth asking this week
- When does my contract end, and when can I start getting renewal prices?
- How much of my energy cost moves with the wholesale market?
- What happens to my budget if prices stay at this level through winter?
- Does my current contract still suit how my business uses energy?
If you run a care home, hotel, restaurant or sports club, colder weather usually brings higher demand for heating and lighting. With forecasters pointing to a colder end to October, these questions are worth answering now rather than later.
Get the full UK Energy Market Update
Download the full wholesale market update as a PDF for your records Rybeda 27th October Weekly Energy Market Update or to share with your operations & finance team.
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