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Flagship Energy’s Tejal Shah Energy Markets Update – 8th January 2025

Tejal Shah, Head of Trading & Risk at Flagship Energy provides a market update

With Russian gas flows via the Ukrainian transit route ending on the 1 January 2025, the market opened at highs not seen in over 14 months. Despite expecting the closure and the market already pricing in the loss of supply, the bulls continued.  With most countries making alternative arrangements via rerouting of gas or LNG, markets have eased from the highs seen last week. There has been sufficient supply to meet demand albeit prices are still trading at the higher range of 2024. The first two weeks of January have also coincided with the first cold snap of the year in both the UK and Europe. Demand levels are high but should improve over the second half of the month as temperatures are set to rise towards normal levels. Will the markets reverse risk premiums that have been built up over the last few months or will there be a new narrative to drive prices higher? The commitment of traders report certainly shows increased net long position by investment funds ahead of the new year. Could the pace of storage depletion and the refill challenge Europe may have over summer drive further gains? This has already caused the summer to trade at a premium to Winter 25. A lot will depend on weather over the coming months should there be no major incident. Unfortunately, uncertainty and volatility are set to continue for the time being.

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