Energy Market Update - 02 September 2024
UK gas prices rise due to Norwegian maintenance, with power and oil markets reflecting mixed influences.
UK gas prices opened higher today due to tighter supply conditions, primarily driven by ongoing maintenance work in Norway. The full maintenance shutdown of the Langeled pipeline has reduced Norwegian flows to the UK to 16 mcm/day, significantly below the usual levels. As a result, the UK system has opened 2.8 mcm/day short despite lower-than-average demand.
UK power prices have shown marginal increases, reflecting the higher gas prices and supported by a modest rise in UK carbon prices. Current power generation is also being affected by below-average wind speeds, which are expected to continue throughout the week, further raising gas demand for power generation.
Brent oil prices have continued their downward trend, with the price falling to $76.48/bbl this morning. The decline is largely due to weak demand from China, which saw its lowest monthly consumption in August since September 2022. Despite the global tension caused by the situation in Ukraine, oil prices remain under pressure.
In the broader market, EU gas storage remains well-stocked at 92.40% capacity, ensuring supply security despite ongoing maintenance activities and geopolitical concerns. The TTF Front Month contract has remained stable at €40/MWh, while the NBP Front Month contract has risen to 96p/therm. The UK is set to receive three LNG cargoes by 11 September, which should help alleviate some supply concerns in the near term.