Energy Market Update - 08 August 2024

The NBP market exhibited a bullish trend yesterday, driven by geopolitical tensions near key gas infrastructure between Russia and Ukraine. This morning, prices have opened somewhat higher, continuing the upward momentum.

The NBP Front Month contract for September 2024 surged to 95.00p/therm during yesterday’s session and is currently trading at 96.15p/therm. Concerns over potential disruptions to gas flows due to fighting near the Russia-Ukraine border have contributed to this price rally. In Europe, storage levels are strong with EU facilities at 86.48% and UK storage at 59.40%. Despite this, the UK market remains under pressure due to the discount of NBP to TTF, limiting LNG imports.

The UK system opened long today, maintaining its recent trend. Norwegian gas flows remain robust at 348.2 mcm/day, though planned maintenance is expected to ramp up later this month, potentially tightening supply. Wind generation forecasts are strong, providing a buffer against higher demand driven by warmer temperatures, which are expected to peak nearly 5°C above the seasonal norm by 12 August. UK power prices have increased across the curve, reflecting the rise in natural gas prices.

In related markets, Brent oil is steady at $78.33/bbl, and European carbon prices are slightly up at €70.57/tonne. The TTF market remains volatile, with the Front Month contract rising to €39/MWh, reflecting ongoing concerns about supply stability amidst geopolitical tensions.