Energy Market Update - 25 July 2024

The energy market remains stable as gas demand increases slightly but is comfortably met by the UK system.

The NBP has opened flat compared to Wednesday's close, with front month and curve contracts trading in a narrow range. The UK system is holding a 10mcm surplus this morning, despite a 3mcm rise in overall demand, now at 178mcm, which is 18mcm below the seasonal norm.

Gas prices rose steadily across the UK and continental Europe yesterday, despite the fundamental outlook remaining largely unchanged. The front month NBP contract saw the largest increase, rising 3.2p/th (4.5% day-on-day). Profit-taking and technical factors were suggested as reasons for this sharp rise, along with buy-side drivers pushing up intra-day demand. Additionally, LNG demand in Egypt has risen due to safety concerns in the Red Sea, increasing regional competition for European buyers.

The UK system opened 15mcm oversupplied this morning, with increased Norwegian piped flows and flat LDZ demand. Windspeeds are expected to decrease, but nuclear output is forecasted to rise in the coming weeks. UK LNG send-out remains stable at 8mcm/day, with one cargo due at South Hook Terminal in early August. Export nominations to the continent continue due to the NBP DA discount to TTF DA.

The TTF Front Month contract settled at €32.62, up from €31.62, and the NBP Front Month at 75.81p, up from 73.21p. This morning, the TTF Front Month contract is at €32, down €1 from the previous settlement. UK power prices show the Front Month Baseload at £68, up from £66, and the Front Season at £85, up from £83. Brent Oil is at $82, up from $81, and EUAs are at €68, up from €66.