Energy Market Update - 05 December 2024
The UK energy market saw minor gains in gas contracts this morning, while broader European energy prices softened amid mild weather and stable supply flows.
UK gas prices rose slightly, with the January 2024 contract trading at 118p/therm, up by 0.5p/therm from the previous close. Despite current demand being 27mcm below seasonal norms due to temperatures 5°C above average, forecasts predict colder weather starting next week. The UK system opened 10mcm long, supported by consistent Norwegian imports and robust LNG sendout, with storage facilities shifting to injections.
European gas prices continued to ease, driven by warmer-than-expected weather across the continent and steady supply. The UK’s NBP day-ahead price dropped by 3.84% to 116.00p/therm. Meanwhile, Russian gas flows through Ukraine to Slovakia remained steady at 39.5mcm/day via Velke Kapusany. EU storage levels stood at 84.16%, providing reassurance for winter supply security. LNG deliveries remain strong, with 12 cargoes scheduled for the UK in the coming weeks and additional shipments expected in Northwest Europe.
UK electricity markets mirrored the downward trend in gas, with the day-ahead base price falling to £93.48/MWh. Wind generation is projected to peak at 18GW on 8 December, before dipping to 2.3GW by 11 December, highlighting renewables’ variability. A returning 0.6GW nuclear unit has reduced reliance on gas-fired power generation, further balancing the grid. Forward prices also declined, with the Front Month Baseload contract settling at £99/MWh, down from £103/MWh.
Oil and carbon markets showed little change, with Brent crude at $72.31/bbl and EUA carbon allowances steady at €67.86/tonne. Global LNG markets also remained stable, with Asian JKM prices at $15.08/MMBtu, providing limited upward pressure on European LNG demand. These stable fundamentals, combined with steady Russian flows and LNG arrivals, contribute to a broadly balanced energy market outlook.