Energy Market Update - 31 July 2024

UK power prices dip as wind forecasts improve; geopolitical tensions keep gas prices high.

Front month power prices traded lower yesterday, driven by a £2.92/MWh drop in the week-ahead product, influenced by a 1GW upward revision in week-ahead wind forecasts. A planned outage at the UK-Denmark Viking Link interconnector from 5-18 August will temporarily halt flows, though a return to seasonal temperatures should alleviate some pressure from the reduced capacity.

TTF Front Month gas settled at €35.08, up from €33.87, while NBP Front Month rose to 84.96p from 79.70p. Gas flows were stable with no unplanned outages, and EU gas storage remains robust at 84.71%. The UK's power market showed the Front Month Baseload contract at £69, slightly down from £70. Brent oil settled at $79 per barrel, a slight decrease from $80.

Geopolitical tensions in the Middle East, particularly following recent escalations, continue to influence market sentiment. The return of the Visund field after prolonged maintenance has slightly increased supply, while maintenance on Norwegian assets and steady LNG inflows are expected to maintain market balance.

Spot prices edged higher yesterday due to low liquidity during the holiday season and higher-than-average temperatures. UK power prices also rose, influenced by a lack of renewable generation and strong demand across Europe. The market remains cautious with ongoing concerns about supply disruptions and geopolitical developments.