Energy Market Update - 06 November 2024
European and UK energy markets held firm in yesterday’s session, influenced by colder weather forecasts, reduced wind generation, and growing attention on the U.S. presidential election results, which could impact energy trade policies worldwide.
In the gas markets, the Dutch TTF front month closed at €40.49, while the UK NBP front month increased slightly to 102.69p/therm. Short-term demand for gas-fired power generation remains high due to low wind forecasts, pushing up both UK and TTF prices. Storage levels across Europe are robust at 95.01%, with three LNG shipments expected to arrive in the UK within the next two weeks, supporting supply. However, the U.S. election could bring shifts to global LNG flows, as energy policy changes may impact U.S. LNG exports, which play a critical role in European supply.
UK power markets experienced sharp rises in spot prices, reaching £300/MWh in some peak hours and settling at £127/MWh in the day-ahead auction. The UK front month baseload power contract remained steady at £86/MWh, and the front season at £75/MWh. Lower renewable generation and unseasonably high demand are driving these prices upward, with nuclear output further constrained by outages that will last until December. With the U.S. election outcome potentially shaping policy on renewables and natural gas, UK and European markets are closely watching for any shifts that may alter energy supply chains and prices.
Global oil and carbon markets saw minor adjustments, with Brent crude rising to $76/bbl and EU carbon allowances at €64/tonne. The U.S. election has heightened market uncertainty, especially with one candidate declaring victory, which could lead to new policies on energy tariffs, foreign trade, and carbon regulations. Potential tariffs on Chinese imports or changes to Middle Eastern policy could have long-term implications for global oil and gas flows, especially as Europe seeks to balance its energy mix amid rising demand and reduced Russian gas supplies.
As the U.S. election progresses toward a final outcome, the possibility of shifts in U.S. energy policy looms, especially regarding LNG exports, renewable energy investment, and international relations with key energy suppliers. The energy market is positioned for potential volatility as winter demand heightens and geopolitical shifts add complexity to the outlook for European energy supplies.