Energy Market Update - 20 August 2024

The energy market remains largely stable, with minor fluctuations driven by supply concerns and geopolitical risks. Key influences include consistent pipeline issues in Eastern Europe and low LNG deliveries.

The UK NBP spot prices saw an increase despite a forecasted dip in demand, attributed to processing issues at Norway’s Gullfaks and low market liquidity. Norwegian gas nominations decreased slightly, and further reductions are expected due to upcoming maintenance, which could tighten supply. However, European gas storage levels, currently at 90%, are expected to be near full capacity by the end of summer, mitigating significant price surges.

UK power prices were mixed, with day-ahead contracts losing value while front-month contracts rose slightly. Seasonal contracts experienced marginal declines, reflecting a market still cautious about winter risks and the ongoing geopolitical situation. The delay in LNG sendout from France’s Montoir facility and steady Norwegian gas flow maintain a relatively balanced market outlook.

Today, the UK system opened with a surplus of 7 mcm/day, supported by strong wind generation expected later this week. The forecast suggests moderate temperatures with windspeeds potentially dipping below average next week, which may influence power prices further. Only one LNG cargo is currently inbound to the UK, reinforcing a stable but closely monitored market environment.