Energy Market Update - 03 December 2024
Gas and power prices have risen modestly today, driven by forecasts of colder weather and falling wind generation, although high LNG arrivals continue to temper significant price increases.
UK gas prices saw upward movement, with the NBP day-ahead settling at 120.75p/therm, reflecting increased demand from colder weather and reduced wind output. The January 2025 contract also rose slightly to 121.75p/therm. Despite these increases, robust LNG inflows, with 12 cargoes expected over the next two weeks, have provided a stabilising effect. Demand has risen to 290 mcm, still below the seasonal average by 21 mcm, but expected to grow as temperatures dip 2°C below norms later this week.
UK power prices mirrored the gas market’s bullish sentiment. The day-ahead baseload settled at £113.40/MWh, up from the previous day. Wind speeds are forecast to increase temporarily from 5 December, which could boost wind power generation before declining again. Extended operation plans for key UK nuclear plants, such as Heysham and Hartlepool, aim to enhance grid stability, although these aging reactors pose operational challenges.
Broader energy markets have also shown volatility. The TTF gas front month contract rose marginally to €49/MWh, as EU storage levels remain healthy at 85.17%. However, competition from increasing Asian LNG demand could divert cargoes away from Europe. Brent crude prices stayed steady at $71.83/bbl, while carbon allowances increased slightly to €68.83/tonne, driven by tightening emissions targets.