Energy Market Update - 06 August 2024

The NBP market experienced a sell-off yesterday due to a global equity decline and recession fears impacting demand. This morning, the FM Sep-24 contract is trading at 88.80p/therm.

The UK system remains long by around 22mcm, as demand forecasts are trailing seasonal norms by 23mcm. Temperatures are set to dip below normal until Friday, then rise into the weekend. Wind generation remains strong, potentially offsetting any increased LDZ demand.

No LNG vessels are expected in the UK in the next couple of weeks as Asian spot LNG prices reach one-month highs. Higher temperatures in parts of Asia are increasing cooling demand. Despite some unplanned maintenance, Norwegian flows to the continent reached 356.1mcm/day, boosting UK terminal nominations.

Spot prices fell across European hubs yesterday due to bearish supply fundamentals and subsiding heatwaves. The JKM benchmark dropped to $12.772/MMBtu. French nuclear output peaked at 42.4GW with the return of the Cattenom-4 reactor, stabilizing power supply.

The UK system opened long again today, with continued below-average LDZ demand. Temperatures are expected to rise above seasonal norms after 20 August. MRS and Rough are nominating injections, and LNG send-out is at 9mcm/day. UK exports to the continent are steady at 53mcm/day. Wind generation is forecasted to average 10.6GW this week, above seasonal normal levels.