Energy Market Update - 10 October 2024
The NBP gas market opened in line with last evening’s close, with the November-24 contract trading at 96.85p/therm. Overall, market movements are driven by falling temperatures and ongoing geopolitical uncertainty.
The UK gas system remains long this morning, following a week of lower-than-seasonal demand, currently around 12mcm below the seasonal norm. This is due to a cooler weather spell expected to last until early next week. Similar drops in temperatures across Europe may also increase regional demand. EU gas storage continues to show resilience, standing at 94.64% full, helping to maintain stable supply levels as Norwegian gas flows have slightly increased despite ongoing outages at the Gullfaks and Troll fields.
Geopolitical factors remain a critical driver of price volatility, with the conflict in the Middle East adding risk premiums to energy prices. Yesterday, NBP Front Month prices closed lower at 95.58p/therm, down from 97.14p, while TTF Front Month settled at €38.34, a minor decline from €38.92. Despite these declines, the market remains on edge due to uncertain outcomes from ongoing diplomatic efforts between Israel and the US.
In the power market, UK spot prices dipped, with the day-ahead baseload trading at £71.65/MWh, down from £79/MWh. Similarly, the UK Front Month Baseload contract traded at £83/MWh. Lower wind generation has increased gas-for-power demand, further tightening the supply side. Brent oil remains stable at $77/bbl, while EU carbon prices (EUAs) edged up to €62/tonne.