Energy Market Update - 02 December 2024
UK energy markets opened higher today, driven by colder weather forecasts, increased EU storage targets, and ongoing geopolitical concerns regarding Russian gas supplies.
Gas prices saw upward movement following the European Commission’s release of new storage requirements. The January 2025 NBP contract increased to 121.30p/therm, with a high of 122.75p/therm during the morning session. The UK system remains 12 mcm/day long, bolstered by strong LNG inflows and consistent flows through Langeled and the UKCS pipeline. EU storage sits at 85.47%, below the levels seen in most of the past five years, which, coupled with declining Russian gas flows, has heightened market volatility. Russian nominations via Ukraine were lower, and flows to Austria’s OMV ceased, reflecting ongoing tensions as the transit deal nears expiration.
Power prices mirrored gas market trends, with the UK Day-Ahead Baseload settling at £94.11/MWh and the Front Month Baseload contract at £100/MWh. Wind generation capacity is expected to fluctuate this week, with sharp declines followed by rebounds, temporarily reducing reliance on gas-fired generation. French nuclear output exceeded 50 GW last week, alleviating some pressure on interconnectors. However, ongoing outages at UK nuclear facilities, including Hartlepool and Torness, continue to impact overall capacity, with Sizewell B-1 expected to return on 5 December.
Other key energy metrics show Brent crude oil stabilised at $72.94/bbl amid global demand uncertainties, and coal prices stood at $122.78/tonne for ARA CIF deliveries. Carbon prices remained steady at €68.40/tonne. Currency movements saw the GBP/EUR exchange rate at 1.2019. These factors contribute to a complex market landscape as the UK anticipates mixed temperatures and further supply and demand shifts in the weeks ahead.