Energy Market Update - 11 September 2024
NBP prices opened slightly higher this morning following a strong downward movement in yesterday's session.
The front-month October 2024 contract is trading at 86.00p/th, around 1.50p/th higher than the previous close. The UK system is currently oversupplied by 6mcm, with demand up due to colder-than-average weather. UK temperatures are 4°C below seasonal norms, with even colder conditions expected by Friday and Saturday.
Storage withdrawals have increased to meet additional weather-driven demand, particularly with tight supplies due to Norwegian maintenance. European gas storage levels remain strong, with stocks at 93.09% full as injections continue. Despite the bullish weather-driven demand, global sentiment is tempered by strong supply and a weaker outlook for oil prices. Brent crude remains near its lowest levels in two years at $69.19/bbl, as OPEC has downgraded global demand forecasts for 2024 and 2025.
UK power prices are also seeing modest pressure, with UK DA Base at £50.04/MWh. Windspeeds are expected to decrease in the coming days, raising gas-for-power demand. Despite this, LNG send-out remains stable at 10mcm/day, and the UK is expecting two LNG cargoes over the next three weeks. Oil markets remain affected by supply disruptions as Hurricane Francine strengthens, though losses have been limited by weaker demand forecasts.
The currency markets show the GBP/EUR exchange rate at £1.1867/€, which could influence UK energy imports. In carbon markets, EUA Dec 2024 prices remain stable at €64.92/tonne. Overall, while short-term weather factors are driving demand, broader market dynamics continue to weigh on energy prices.