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Mild December Keeps Prices at Bay

UK Energy Market Update

December 2023

Market Summary


December saw temperatures remain below seasonal norms for the majority of the month. This, combined with extremely healthy EU gas storage saw prices remain relatively steady this month. We began the month with EU gas storage at 97% full and brought in the new year at 87%, well above the 5-year seasonal norm of 74%.


In November, LNG shipments into Northwest Europe reached their highest figure since May. There was a total of 77 shipments, with the USA providing 45 while Russia accounted for 11. While December was another strong month for LNG cargoes in Europe, there were disruptions to shipping on a more global scale. The continued disruptions at the Panama Canal and the attacks on oil & LNG cargoes by Houthi rebels in the Red Sea caused prices to spike briefly. Prices eased relatively quickly due to alternative shipping routes and the announcement that the UK had sent two warships to join a US led task force in the Red Sea that will provide security along the busy trade route.


Neptune Energy, a UK operator, and its partners have revealed a fresh discovery in the Norwegian North Sea at the Kyrre prospect, near the current Gjøa field. This discovery follows the recent drilling of the Ofelia well, and combined, these two findings are projected to have around 52 million barrels (oil equivalent) of gas reserves.


In 2023, European imports of Russian gas experienced a sharp decline of approximately 56%, amounting to 28.3 billion cubic meters. This is noteworthy considering that in the peak year of 2022, Russian gas exports to Europe reached an annual volume of about 64 billion cubic meters. The European Union is considering allowing member states to impose bans on Russian gas supplies, including significant LNG shipments.


The COP28 summit concluded on December 13th in Dubai. After extensive deliberation, representatives from 198 countries struck a deal to commit to a ‘transition away from fossil fuels.’


Germany and Norway's Equinor have reached a substantial $55 billion agreement. This holds significance as Norway contributes to nearly half of Germany's gas imports. The contract is anticipated to encompass approximately 29 billion cubic meters, with the option to extend for another 5 years after the contract expires.


During the first eleven months of this year, Azerbaijan exported over 22 billion cubic metres of gas, which amounts to 9% more than it did a year ago. Europe was one of the biggest consumers of gas from Azerbaijan, accounting for around half of the country's total exports at 10.85 billion cubic metres.

Net Zero News


The UK is testing a large heat pump system in Swaffham Prior, a village in rural East Cambridgeshire, with the view of determining the best way to get rural villages to the Net Zero target.


At COP28, more than 100 countries agreed to triple renewable energy capacity by 2030. Companies are saying this is achievable but will come with many challenges.


New analysis indicates that the United Kingdom's electricity generation from fossil fuels in 2023 saw a 22% year-on-year decline, reaching its lowest point since 1957 at 104 terawatt hours.


The UK Government is poised to offer substantial support, with a backing of £6 billion, to improve energy efficiency for around a million households and hundreds of businesses.


New research suggests that the UK's goal to decarbonize its grid by 2035 is unachievable due to existing limitations in offshore wind, nuclear, and pumped hydro storage capacities.


By 2027, the UK plans to introduce a new carbon pricing mechanism for imports, with the goal of supporting its decarbonization efforts.

The collaboration between The Crown Estate and the electricity system operator ESO aims to streamline seabed leasing and expedite the development of transmission infrastructure for renewable energy.

Electricity and Gas Prices


Prices this month remained below the levels expected although volatility remains in the market, as we saw with the spikes that occurred due to the rebel attacks on oil and LNG ships in the Red Sea. Mild weather, strong Norwegian flows and extremely healthy EU gas storage have contributed to keeping prices slightly lower than last month. Once again this month, day-ahead prices were the most volatile, with electricity prices ranging from -0.15 £/MWh to 111 £/MWh.

Flexible Purchasing

EPEX Price

Some of our flexible purchasing customers are buying on EPEX, a European auction for power. Because they auction every hour of each day, customers get the “market average” price as opposed to a fixed-term contract over e.g. a 12-month period. Being on this product means that you will pay the average of each day for the month and once the market falls the price will follow.


The EPEX price finished the month with an average of 6.65 p/kWh (commodity). With the non-commodity added to this, the overall rate will be around 19.55 p/kWh+.

Carbon Prices

Carbon prices have been on the rise due to the absence of fresh supply and an impending switch to colder, calmer weather supported a rebound off a bearish trend to start the month. The EU carbon price finished December at €80.19 per tonne.

Oil Market

1st - Oil prices fell after reports revealed that OPEC's production cuts were not as substantial as anticipated. OPEC, responsible for around 40% of global oil production, is striving to reduce output in response to diminished demand and projections of excess supply. While analysts foresaw a 2 million barrels per day (bpd) reduction, OPEC ultimately agreed to a 900,000-bpd decrease.


8th – Brent crude oil is experiencing a bearish trend, currently priced at $75.94. Despite ongoing OPEC production cuts, market analysts predict the market will be oversupplied heading into 2024. This, combined with reduced demand from China, has led to a decline in prices. China's crude oil imports in November dropped by 9% compared to the same month the previous year.


11th - Brent crude oil is on the rise, presently at $75.85. The United States intends to buy up to 3 million barrels of crude oil in March 2024 to refill its Strategic Petroleum Reserve. Additionally, as OPEC considers a 2.2 million barrels per day (bpd) output reduction in the first quarter of 2024, prices remain under strain.


15th - Oil prices have increased, reaching $77.12. The International Energy Agency anticipates a growth in global oil consumption of 1.1 million barrels per day (bdp) in 2024, which is approximately 130,000 bdp higher than its earlier projection.


18th – The oil price has reached $76.98. Russia, the world's second-largest oil supplier, has declared further reductions in supply, amounting to approximately 50,000 barrels per day (bpd) extending into 2024.


20th - Oil prices rise amidst developments in the Red Sea. Reports indicate that the Red Sea and Suez Canal facilitate about 12% of global trade. Fortunately, the impact on oil and LNG supplies has been limited so far, thanks to diversion options.


21st - Oil prices are declining amid concerns about subdued demand. The EIA revealed that US oil stockpiles rose by 2.9 million barrels, contradicting investors' expectations of a 2.3-million-barrel decrease.

Get in Touch

Our team are independent energy advisors who provide competitive gas, electricity, and water prices for commercial businesses across the region.


Our complete energy management service also includes helping businesses to identify potential savings through energy audits, tax levy rebates and grant funding. We can also help you plan for Net Zero and achieve compliance with our in-house ESOS assessment service.

Contact us for a free initial consultation about your business energy.

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