Energy Market Update - 05 September 2024
The energy market saw further downward price movements on Wednesday, driven by strong renewable generation forecasts and steady Norwegian gas maintenance. Lower demand for gas-fired generation also added to the bearish sentiment.
UK and European gas markets have seen increased focus on geopolitical risks, particularly around the Russo-Ukrainian conflict. However, with recent concerns about potential disruptions from the Sudzha gas plant subsiding, risk premiums have eroded. This resulted in a significant drop in the NBP Front Month contract, which fell 3.45p/th to 85.7p/th. TTF Front Month prices similarly decreased, settling at €35.80.
Fundamental supply remains secure, with no unplanned outages reported. Flows from Norway and Russia have remained consistent, with Russian nominations through Sudzha and Velke Kapusany maintaining stable levels. European gas storage is 92.61% full, supporting market stability. Meanwhile, the UK's strong renewable generation, especially wind, has reduced gas demand for power generation, leading to lower spot prices in both gas and power markets.
UK power prices saw declines, with the Front Month Baseload contract down to £73/MWh and spot power prices falling to £81/MWh. Brent crude oil continues to show weakness, trading at $72.70/bbl amid global demand pressures. EU carbon prices also dipped slightly, with EUAs settling at €67.00/tonne.