Energy Market Update - 07 November 2024
The energy markets experienced mixed movement yesterday, influenced by the U.S. election results and market expectations around supply and demand. Prices have since shown signs of stabilisation.
Natural gas prices were mixed across European hubs, with the UK NBP Day-Ahead at 102.4 p/therm, displaying volatility amid the confirmation of Donald Trump’s U.S. presidential win. Initially, prices dropped due to an early selloff, though losses were later reversed. The market speculates that a Trump administration may increase U.S. oil production, which could bolster the dollar, impacting natural gas costs. Norwegian gas flows to the UK remained stable, despite an unexpected outage at the Oseberg field. The TTF Front Month contract, after rallying late in the previous session, opened higher today at €41/MWh, reflecting ongoing bullish sentiment. Meanwhile, UK gas storage levels are beginning to decline from their recent peak of 95%.
UK power prices declined, driven by an improved wind generation forecast, which weighed on prices. The N2EX Day-Ahead aggregate price reached a 2023 high, indicating strong but volatile demand. UK Day-Ahead Baseload electricity settled at £102.1/MWh, slightly down from earlier highs, and the UK Front Month Baseload contract edged down to £85/MWh. Wind output is expected to remain below seasonal norms this week, although slightly higher than last week, which could continue to moderate power prices. LNG imports remain steady, with two cargoes expected in the UK over the next two weeks, supporting gas supplies.
In broader energy markets, Brent crude prices saw a minor rebound, trading at $74.92/bbl, amid concerns over potential disruptions from Hurricane Rafael in the Gulf of Mexico. EU carbon (EUA) prices held at €63.76/tonne, maintaining stable trading as lower renewable output contributed to carbon-intensive generation demand. The coal market, with ARA CIF coal prices at $120.31/tonne, reflects continuing support for fossil fuels amidst mixed renewable generation output across Europe.
Overall, the UK energy markets are showing relative stability. Near-term temperatures are expected to remain just below seasonal norms, potentially driving moderate demand for heating. The UK’s gas system opened long today, supported by resumed operations at the Teeside terminal and ongoing LNG imports. EU gas storage remains high at 94.75%, adding resilience to the market as it approaches winter.