Energy Market Update - 12 November 2024
Energy prices surged yesterday, driven by supply disruptions following Hurricane Rafael in the Gulf of Mexico, alongside persisting geopolitical tensions.
European gas benchmarks continued their upward momentum, with TTF firmly above €40/MWh and the UK’s NBP holding at £1/therm for the upcoming year. TTF Front Month settled at €43.73 (up from €42.41), and the NBP Front Month contract rose to 110.56p (from 107.41p), showing firm near-term support. The strength of these prices highlights a sustained market concern about global supply stability, with the potential impact of disrupted Russian flows adding to these pressures. Notably, this morning’s TTF Front Month opened at €44, remaining stable since the prior settlement.
Supply data today shows no unplanned outages, with pipeline flows steady, though slightly lower. Russia’s Velke Kapusany and Sudzha routes reported 41.2mcm and 42.3mcm flows, respectively. Nord Stream remains offline, while European gas storage stands at a robust 93.37% capacity, bolstered by upcoming LNG shipments, with three vessels due in the UK over the next two weeks. In key price movements, the UK gas NBP spot market climbed to 111p (from 104p), while the UK power Baseload spot rose sharply to £106/MWh (from £96/MWh).
In the power market, UK prices reflect a firming sentiment. The UK Front Month Baseload increased to £92 (from £90), with the Front Season contract reaching £80 (from £78). Weather forecasts continue to signal colder-than-average temperatures for the UK next week, with expectations of a 4-5 degree drop below seasonal norms, alongside reduced wind generation, forecasted at around 20% below typical levels. These conditions are likely to support continued upward pressure on energy prices in the near term, particularly if low wind levels persist.
Broader commodity markets show mixed signals. Brent crude fell to $72 (from $74), while Henry Hub natural gas prices edged up to $2.92 (from $2.67). The EU carbon allowances (EUAs) remained stable at €68, while JKM LNG and TTF-equivalent LNG held at $13.55 and $13.66, respectively. Additionally, geopolitical concerns persist, with Ukrainian President Zelensky reporting a buildup of Russian forces near Kursk, adding potential risk to pipeline infrastructure at Sudzha, a key entry point. These factors continue to underscore the market’s sensitivity to both regional and global supply risks.