As we step into 2024, we’re here to bring you our Energy Market Outlook for 2024.
The energy market continues to be a dynamic and challenging environment, so we’re kicking the new year off with the latest insights into the market, highlighting the trends and factors influencing it.
Energy Market 2023 Recap – Reflecting on Volatility
The previous year was marked by significant volatility, driven by geopolitical tensions and economic uncertainties. Renewable energy continued its ascent, albeit with infrastructural and policy hurdles.
The war in Ukraine significantly impacted the energy conversation, bringing energy security, affordability, and industrial competitiveness into focus alongside sustainability. The demand for fossil fuels presented a complex outlook early in the year as the UK/EU grappled with energy security and independence concerns.
Later in the year, despite immediate pressures easing, the global energy crisis left markets unsettled, with risks of further disruption and small events on shores as far away as Australia spooked markets close to home.
Despite all that happened, the markets rebounded and gained confidence, with strong LNG supplies secured and a well-defined strategy for gas storage, meant that markets remained stable for with mostly downward pressure for the most of Q3/4 of 2023.
Energy Market Outlook 2024 – Current Drivers
As we navigate the early stages of 2024, several key factors are shaping the energy market:
- Temperatures: The UK is experiencing lower-than-normal temperatures, influencing gas and baseload contract prices.
- Interconnector Flows: With stable flows, there’s a shift in pressure on baseload contracts.
- LNG & Storage: An influx of LNG cargoes and high storage levels are affecting near curve and future-dated contracts.
- Norwegian Gas Flows: Increased flows are adding a bearish sentiment to prompt and near curve gas contracts.
- Global Oil Trends: Sideways trading in Brent Crude amid geopolitical concerns is influencing the wider energy complex.
Energy buyers must maintain a vigilant watch on the market to overcome energy renewal challenges. The beginning of the year has already shown a continuation of the previous trends, leading to a 6% drop in UK gas and baseload front month prices.
Key factors influencing the market include, geopolitical concerns and environmental factors, with declining temperatures expected to reach their coldest on January 9th. This weather pattern will influence demand for gas, just as wind generation is forecasted to decrease.
However, the supply side appears robust as steady Norwegian flows and a significant inflow of LNG cargoes are expected in the UK and Europe. Additionally, high European storage levels, currently at 86% fullness, indicate a strong supply capacity to meet forthcoming demand.
Business Energy Renewal – 2024 Options
With market conditions easing, businesses should evaluate their energy budgets and risk appetites, considering whether to lock in future renewal offers.
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What is the outlook for the energy sector in 2024?
The energy sector in 2024 is expected to witness significant changes driven by government spending, tax incentives, and efforts to reduce carbon emissions across various sectors. Key areas like manufacturing, power, utilities, and renewable energy are set to experience pivotal developments.
Will business energy prices go down in 2024?
There’s an expectation of a volatile year ahead in business energy costs in 2024. Whilst wholesale costs have primarily decreased over the last 12 months, there are many factors contributing to the challenging year ahead. Confidence remains high due to storage reserves, improved supply accessibility, and favourable weather patterns. However, third-party costs like transmission and distribution are likely to remain high
What is the outlook for the energy market?
2024 is poised to be a turning point for the energy market. Major factors influencing this change include the drive towards Net Zero, geopolitical tensions, and the potential for an economic downturn. The geopolitical landscape, especially the ongoing conflict in Ukraine and tensions in the Middle East, is expected to play a significant role in shaping energy prices.
Should I fix my business energy prices until 2025?
It’s advisable to secure a fixed energy tariff if a better deal is available, at the very least every business should review their options as soon as possible. Despite the decline in wholesale prices, they are expected to rise in 2025, and fixing your rate can protect against potential future price hikes.
