Energy Market Update - 27 August 2024

The NBP market rallied due to ongoing geopolitical tensions, particularly the lack of a ceasefire in the Middle East and continued conflicts in Ukraine, raising concerns about potential disruptions in gas supply.

In the gas market, the NBP Day-Ahead price increased to 86.50 p/therm, supported by the recent geopolitical developments and ongoing strikes in the Middle East. The situation in Ukraine, with attacks in the Kursk region, has added further anxiety, potentially impacting gas flows as we approach the winter season. Meanwhile, the UK system opened 18 mcm long, with demand trailing seasonal norms by about 60 mcm. Despite this, three LNG vessels are scheduled to arrive in the UK by 10 September, helping to stabilise supply as summer maintenance on European infrastructure begins.

Power prices also saw a modest increase, with the UK Day-Ahead Base price reaching £59.10/MWh. The market is adjusting to a forecast of fluctuating temperatures, with some days expected to be above seasonal norms before cooling later in the week. Wind generation is forecasted to drop below average levels, which could slightly boost gas demand for power generation.

In other markets, Brent oil prices have risen to $79.02/bbl, reflecting the broader concerns about global energy supply. Carbon prices have eased slightly, with EUAs for December 2024 trading at €71.13/tonne, while the GBP/EUR exchange rate stands at 1.1802. These factors contribute to a complex but watchful energy market as we move towards September.