Energy Market Update - 06 September 2024
The energy market saw mixed movement today, with gas prices rising and power prices falling due to strong renewable generation forecasts.
UK natural gas prices increased, with the NBP Day-Ahead closing at 85.90p/therm, supported by continued Norwegian maintenance and limited imports. Norwegian gas flows remain constrained, with 192mcm/day of exports, and the UK system opened short by 7mcm/day. Despite these supply issues, strong wind generation and mild weather reduced gas demand for power. LNG supplies remain steady, with four deliveries expected in the coming weeks, and European storage levels are at 93%.
UK power prices softened, with the Day-Ahead contract dropping to £73.33/MWh. Increased wind generation has eased pressure on gas-fired plants, and forecasts suggest further wind output next week. The prompt power market reflects this shift, with reduced demand expected as temperatures rise above seasonal norms, peaking at 26°C in parts of the UK.
In oil markets, Brent crude edged up slightly to $72.69/bbl after OPEC+ confirmed extended production cuts, though prices remain near 14-month lows amid persistent demand concerns. European coal prices remained stable at $118.51/tonne, with little change in market fundamentals. Meanwhile, carbon prices slipped to €66.20/tonne, reflecting moderate adjustments in the carbon market.
Currency movements saw GBP/EUR trading at 1.1860. Overall, the energy market remains finely balanced, with gas prices responding to supply constraints, while power prices are driven by favourable renewable conditions and lower demand expectations.