Energy Market Update - 02 August 2024

Further upside was seen in yesterday's session as fears over escalations in the Middle East persist, maintaining long-standing market nervousness.

Yesterday, the TTF Front Month contract settled at €36.97 (from €35.87) and the NBP Front Month contract at 90.17p (from 86.98p). This morning, the TTF Front Month remains at €37, unchanged from the previous settlement. Key contracts showed minor fluctuations: the Curve TTF Front Month is €37, Front Season €40 (vs €37 and €39); Curve NBP Front Month is 90p, Front Season 103p (vs 87p and 101p). UK Gas NBP spot increased to 86p (from 79p), and UK Power DA dropped to £74 (from £82).

No unplanned outages were reported this morning. Gas flows are stable at 342 mcm (from 340 mcm), with Russian nominations showing Velke Kapusany at 39.6 mcm (40.0) and Sudzha at 42.4 mcm (unchanged). Nord Stream remains unavailable, and EU gas storage is 85.12% full according to AGSI+. Only one LNG vessel is due to arrive in the UK in the next couple of weeks.

The UK system opened 4.4 mcm long this morning, with demand forecasts trailing seasonal demand by nearly 50 mcm. Flows from Langeled dropped to 67.5 mcm from yesterday's 70 mcm, reflecting a significant drop in UK demand. Despite minor curtailments at Norway's Sleipner field, Norwegian flow reached 346 mcm/day, the highest in months according to Gassco. Wind generation is expected to peak on Monday, with UK domestic production impacted by various outages.

Oil prices remain influenced by Middle East uncertainties, with Brent Oil at $80 (from $81). The Bank of England's recent interest rate reduction by 25bps has yet to be mirrored by the USA, potentially affecting oil demand. EUAs are at €71 (from €69), Henry Hub at $1.97 (from $2.04), and JKM at $12.49 (from $12.53), with a TTF equivalent of $11.70 (from $11.40).