Energy Market Update - 30 July 2024

The energy market saw further gains yesterday, driven by warmer weather and strong demand.

Gas prices rose, with the TTF Front Month contract settling at €33.87 (from €32.48) and the NBP Front Month contract at 79.70p (from 76.11p). Warmer temperatures increased gas demand for power generation, contributing to the bullish trend. Despite stable fundamentals, the market remains nervous due to the short queue of LNG arrivals expected in the coming weeks.

UK power prices followed gas prices higher, supported by an upward revision in temperatures for the week starting 29th July. Solar power generation in the UK averaged 2.3GW in July, 0.2GW above the 2019-2023 average. Wind power production also exceeded the five-year average by 1GW, averaging 6.5GW. These factors are expected to continue supporting supply margins through August.

The UK system opened 8mcm/day long this morning, with temperatures expected to drop slightly but remain above the seasonal norm throughout August. Wind generation is forecasted to increase next week, alongside higher nuclear output. Gas flow remains strong with Visund still on unplanned outage, and EU gas storage levels are healthy at 84.49%.

Key contracts this morning show the TTF Front Month at €34 and the NBP Front Month at 80p. UK power prices are £70 for the Front Month Baseload contract and £86 for the Front Season. Brent Oil stands at $80, EUAs at €69, Henry Hub at $2.04, and JKM at $12.45. The overall market sentiment remains cautiously optimistic amidst these complex dynamics.