Electricity was relatively cheap last week. The main reason: the weather is cooperating. The relatively large production of green electricity and low gas prices keep prices relatively low in the otherwise volatile market. However, it is questionable whether the price of electricity will maintain this favorable price. If it is not successful to save gas, the somewhat calmed price on the TTF could rise again. The OPEC+ intervention is causing the oil price to skyrocket.
While prices fluctuated considerably last week due to the aftershocks of the Nordstream pipeline incident, the electricity market was quite calm. The price of the EPEX SPOT was below the opening price all week. At that time, the price stood at € 325,54. On Thursday, the price of power hit its lowest point at $103,24. Towards the weekend, the price started to rise again, bringing electricity to €10 per megawatt hour at the time of writing (October 175,07).
Favorable weather conditions in particular resulted in a low electricity price. Due to the autumnal weather, the wind turbines were running at full speed and prices on the gas market were also negative due to the high temperatures. In addition to the mild weather, favorable filling levels of the European gas reserves and steady developments in the field of LNG imports are depressing the gas price. . Despite a short-lived rise between October 4 and 6, the gas price shows a clear downward trend. At the time of writing (on October 10), the price is at €148,25 at the lowest point since June 30. Over the whole week, the gas price fell by 17,2%.
It remains to be seen whether the gas price will remain this low. Some analysts expect that gas savings will be disappointing due to various price ceilings and subsidies. According to the International Energy Agency, shortages are looming, which means that an explosive rise in gas prices cannot be ruled out.
Price increase
The fact that the EPEX SPOT found its way up again is mainly the result of maintenance on coal-fired power stations. As a result of the work, extra gas is used to generate electricity, resulting in higher electricity prices. Although the gas price is relatively favorable for the current situation, the costs of the raw material are still historically high.
The price of oil is also pushing up energy prices. In contrast to the prices of electricity and gas, the oil price rose considerably last week. Since OPEC+ announced a production cut of 2 million barrels of crude oil, the oil price has been on the rise. On September 26, a barrel of Brent oil cost just $82,86. As of this writing (Aug. 10), a barrel of crude is already $97,92, and according to Standard and Poor, this is just the beginning of the price hike. According to the research bureau of the famous ratings agency, the price of oil rises to about $110 a barrel.