Following the volatility of the previous month, November saw a return to a more stable marketplace.
Despite the ongoing conflict in Gaza, this became less of a contributory factor on prices as initial concerns that the war may spread across the Middle East dissipated.
The supply fundamentals remained very strong with EU gas storage sitting at a record high of 94% by the end of the month. This is despite the extremely low temperatures experienced in the UK as the period ended.
Earlier in the month temperatures consistently stayed above seasonal norms, which resulted in reduced gas demand, generating further bearish market sentiment.
Norwegian gas flows were initially interrupted but increased across the period maintaining strong levels of supply as we entered December. High Levels of LNG export continued to come into the UK and North West Europe within a significant number of shipments arriving on the shores.
Markets spiked in October following the commencement of the Middle East conflict with concerns the war may disrupt LNG shipments, however as this failed to materialise then markets softened in response.
Wind generation remained relatively stable across the November period boosting the generation mix. The government has recently announced that they have increased the maximum price for offshore wind projects in the Contracts for Difference (CfD) renewables scheme.
This is to try and encourage further investment in the electricity infrastructure in the UK, where the guaranteed generation price has been increased by 66% for offshore wind projects, (to £73/MWh), and by 52% for floating offshore wind projects, (to £176/MWh) prior to next year’s Allocation Round.
During the months July, August and September this year over 40% of the UK’s electricity was provided by renewables for the first time. On the 19th August, the contribution of renewables exceeded 77%. This was over 5% higher than the year’s previous best figure.
Oil prices have fallen for the majority of November, with week-on-week losses emerging despite the ongoing war in Israel and Gaza. With the reduced prospect of supply disruptions occurring from the hostilities, the end of the month saw markets sit around $80/Bbl mark. High U.S inventories and concerns around global demand for oil has also resulted in downwards pressure on prices.
