Energy Market Update - 03 September 2024
Gas Prices Decline Amid Maintenance and Low Demand
UK gas prices opened slightly lower today, with the October-24 front month contract down by 0.6p/therm in early trading. This follows Monday’s decline, where most near-curve prices dropped by over 2p/therm during the afternoon as low demand was easily met despite the ongoing halt in Langeled flows.
Langeled flows will remain halted until 16th September due to maintenance at the Easington terminal. To compensate, the UK has withdrawn 27 mcm of gas from storage, and exports to Europe have decreased. Additionally, low wind generation is keeping demand higher than expected, pushing CCGT demand to 40 mcm on Monday.
In Europe, TTF prices were under pressure as Netherlands storage reached 90% capacity, while German spot prices fell as storage levels hit a five-year high, with facilities now 95% full. In the UK, power prices showed mixed trends; spot prices rose, but prices on contracts further out on the curve decreased.
Today, the UK system has opened 2 mcm/day short, with reduced flows through Vesterled and continued absence of Langeled flows due to maintenance. UK Continental Shelf terminal receipts are lower at 82 mcm/day. Norwegian exports to Europe have also decreased to 173 mcm/day as maintenance continues. LNG send out remains stable at 10 mcm/day, with two LNG tankers expected in the next eight days. Meanwhile, the UK government has secured a record 9.6 GW of renewable power capacity, primarily through new offshore wind projects, in the latest Contracts for Difference auction.