Energy Market Update - 04 November 2024
European natural gas prices saw renewed pressure on Friday due to reports of a potential Azeri gas transit deal via Ukraine, aimed to replace Russian flows when their transit contract expires at year-end. This uncertainty, coupled with warmer-than-seasonal temperature forecasts, contributed to Friday’s downward session.
News of the Azeri transit deal discussions drove substantial losses across the gas curve on Friday, with the TTF and NBP front-month and front-season contracts each declining by over 4.5p/therm (0.15p/kWh) from the prior close. Late Thursday, reports surfaced suggesting that Hungary and Slovakia are close to securing an arrangement for Azeri gas to transit through Ukraine, though Ukraine’s grid operator, GTSOU, has denied involvement. This uncertainty has kept market participants cautious as they await clearer information.
On Friday, the TTF Front Month contract closed at €39.18/MWh, down from €40.59/MWh, and the NBP Front Month settled at 99.18p/therm, a decrease from 103.36p/therm. The UK’s gas storage stability, with EU levels at 95.21%, and four LNG vessels scheduled to arrive, continued to support overall supply. Meanwhile, Shell announced a significant gas discovery in the southern North Sea’s Selene Prospect, offering potential future support to UK supply as domestic production falls.
This morning, gas prices opened with a slight premium as the market seeks a direction, with the Summer 2025 Front Season contract trading approximately 2p/therm (0.07p/kWh) above Friday’s settlement. UK power prices were mixed, with the spot UK Base load price rising to £106/MWh, while Front Month Baseload edged lower to £83/MWh. Reduced nuclear output and increased gas-for-power demand due to lower wind capacity influenced the spot gains, while prices on the curve softened in line with gas.