2024 End of Year Review

2024 Energy Market Review

Published: 17/01/2025

Read time: 5 minutes

Welcome to our 2024 End of Year Review where we will be looking back at the key events that have shaped the UK energy market throughout the year, providing valuable insight into the drivers behind price volatility and market trends. Join Jay Luka, Customer Hedging Analyst as he shares his experience of working within the sector and explores how weather patterns, conflicts, geopolitical developments, and OPEC+ (Organisation of the Petroleum Exporting Countries Plus) decisions have all influenced energy demand, supply, and prices and what's spurred buying interest into 2025. Over to you Jay...

I've been working in the energy industry for a few years now, and if there's one thing I've learnt, its how unpredictable things can get. I've seen it go through undeniably turbulent times, from the COVID-19 pandemic to the ever-changing geopolitical landscape. We've seen tensions in Ukraine escalate, leading to significant disruptions in the supply chain and causing further instability in the market. Sanctions imposed on Russia then exacerbated the already strained energy supply, pushing prices to unprecedented heights. This, along with Governments worldwide implementing stricter regulations and ambitious carbon reduction targets, means we’ve seen added layers of complexity for energy companies like us, transforming the way we look at the markets and how they operate. I think last year in 2024 we finally saw a relative stabilisation in the sector which has provided a welcome and much needed respite. 

From my time in the industry, and certainly over the last year or so, I’ve developed a deep appreciation for the resilience and adaptability of the energy sector and its ability to navigate through such turbulent times while also ensuring the uninterrupted supply of energy. This has been a testament to the industry's strength and innovation and the desire of those working in it to make positive changes. It’s been a long journey, and one which has been both challenging and rewarding, providing invaluable lessons and insights into the complexities and intricacies of global energy markets and how this impacts the UK, and as I look to provide a review of 2024, its clear how far the industry has come and what reoccurring themes are still prevalent.

The Energy Market in 2024...

2024 saw an overall descending trend in prices in comparison to 2023. The year started with a bearish (downward trend) movement as Q1 was largely mild which eased demand, adding to downward pressure to prices. During the summer months, annual Norwegian maintenance was as per the schedule and mostly untroubled. However, Hurricane Beryl caused the Freeport LNG facility in Texas to close which resulted in volatility added to prices due to the uncertainty of the duration of the outage. 

The ongoing tensions between Russia and Ukraine escalated when Ukraine launched a counter offensive into the Kursk region where the all-important Sudzha metering point, which transits Russian gas into Europe is located. Moving into the start of Q4, heightened tensions in the Middle East between Iran and Israel added volatility to the market with strikes between the two countries. Aggressive storage withdrawals during the winter thus far due to varying reasons, which I'll touch on later, and the confirmed news of a no transit deal from Russia has supported prices as the year comes to an end. 

Weather review...

During Q1, the market observed declining prices as temperatures were above seasonal norms, with only a few periods where below normal temperatures were seen for a continued time. LDZ demand in the UK for February and March was lower year-on-year, attributing to the softening of prices heading into the summer months. Temperatures during the summer period remained mostly above seasonal norms assisting with consistent injections into storage across the UK and throughout Europe. As winter approached colder weather prompted aggressive withdrawals from storages to meet demand requirements right across the continent. The UK experienced a period of 'Dunkelflaute', (German term for dark wind lull), which is where significantly less renewable wind and solar generation is produced, in turn causing day-ahead power prices to gain substantial value on certain days. 

The Summer Season...

As the summer season began, the continent managed to accomplish a strong foundation in terms of natural gas storages sitting just above 59% at the start of the filling season, putting Europe in a robust position to meet the EU commissions mandated target of 90% by 1st November.

Norwegian maintenance was generally untroubled this year in comparison to the previous year with assets returning online as per the schedule with little or no extensions to planned maintenance phases. Hurricane Beryl posed a major risk to operations at the Freeport LNG facility in Texas as the category one hurricane caused significant damage and disruption. The shutdown of the facility caused turbulence in the gas market and concerns over LNG supply due to the unclear length of the outage and with little reassurance from Freeport as to when operations would resume. The ramp up of processes began a week later and returned to full capacity by mid-July restarting operations as normal.

The hurricane season in 2024 was anticipated to increase overall which was forecasted by the US National Hurricane Authority and came to fruition. Beryl and other hurricanes posed significant risks to oil and gas production sites in the region with Beryl having the largest impact on exports. LNG projects in the US have slowed and the ones which have been approved have faced delays due to the announcement from the Biden administration in early 2024 to pause LNG permits. Recently the administration released an export study urging caution on new LNG permits. With incoming president Donald Trump returning to the White House, is it likely there will be a shift in policy with Trump being an advocate of shipping oil and gas, with the majority of this heading towards Europe, however this remains to be seen. 

Ukraine/Russia transit flows...

The end of 2024 marked the conclusion of a five-year transit agreement deal between Russia - Ukraine for Russian gas to be imported via Ukraine and then onwards into neighbouring European countries which amounted to 5% of the total EU gas imports. Several European countries will be impacted by 42mcm/day curtailment as the majority of transit gas flow is being imported by Slovakia, Austria, and Moldova. 

At the start of August, Ukraine began their incursion into the Kursk region situation in Southwest Russia, where the crucial Sudzha metering point in located, which is where Russian gas flows through into Ukraine. Gazprom announced that flows would continue as normal but stated the risk of unintended war damage could pose a hazard. This caused some volatility in the market due to the ambiguity around the situation and heightened risk to ongoing European gas supplies. 

On 19th September, news of a potential deal agreed for the continuation of Russian gas exports via Azerbaijan onwards into Europe was announced. The market saw this as bearish, and prices tumbled just above 7% on the day in the afternoon session. However, the reports were later deemed to be unverified and prices climbed back to the levels seen prior to the announcement being made. 

In December, the European Commission reiterated that they were not interested in the continuation of a deal with Russia, in the same week, President Putin ruled out the chance of any deal 
occurring ending months of speculation surrounding this situation. Prices elevated with this news in what seemed to be the inevitable outcome based on the current circumstances. 

Middle East Tensions...

During the year, conflict in the Middle East continued with the fear of a wider regional war becoming a possibility. The Red Sea remained a persistent risk with tankers being attacked and cargoes being diverted around the Cape of Good Hope adding substantial time and costs to transit. Tensions intensified between Israel and Iran in April following a strike in Syria on Iran's consulate which led to retaliation strikes in Israel. Similarly, in October, Iran launched strikes in Israel after strikes on various leaders, including Hamas and Hezbollah leaders. Israel vowed to respond to these strikes with discussion surrounding potential oil, nuclear and military targets in response. The market was wary of these risks and spurred further volatility to prices during this period in anticipation of retaliation between the two countries, especially with oil infrastructure as a potential target. 

The oil market was jittery in expectation of what would occur next during this period, and this was reflected in the oil prices and fed into gas prices to a certain extent. Furthermore, OPEC+ had previously stated they would increase production but decided to maintain their cuts throughout the year, due to overall weaker demand and rising output from non-OPEC+ countries. Oil output rises were pushed back to the end of April 2025 with the full unwinding of cuts until the end of 2026. Overall, the oil market has lacked a clear direction, weak Chinese oil demand and forecasts have added bearish sentiment in the market, but there have also been moments where the market has reacted to geopolitical tensions highlighting the volatile nature of the market this year.