Energy Market Update - 13 November 2024
Energy markets continued to climb yesterday, driven by colder weather forecasts which are set to increase heating demand, reinforcing upward pressure on gas and power prices.
Revised forecasts for the week ahead show temperatures dropping below seasonal norms, prompting heightened demand for gas, which remains a primary input for power generation. As a result, electricity prices have also risen in tandem. The current Front Month contracts have reached levels not seen since November 2023, with the TTF Front Month contract settling at €44.26 and the NBP Front Month contract closing at 112.43p. While prices last winter surged due to the energy crisis, this season reflects a steady yet firming market, largely underpinned by ongoing global supply concerns and cautious storage management across Europe.
Supply fundamentals remained mostly stable, with no new unplanned outages reported this morning. Gas flows were recorded at 345 mcm, slightly up from yesterday’s 344 mcm. Russian flows via Velke Kapusany and Sudzha registered marginal declines, maintaining stability overall, though Nord Stream remains offline. EU gas storage levels are reported at 93.04% capacity, with three LNG vessels scheduled to arrive in the UK over the next two weeks. This morning’s TTF Front Month contract opened lower at €43, indicating a minor decline of €1 compared to the previous close.
In UK power markets, contracts displayed mixed movements. The UK Front Month Baseload remained steady at £92, with the Front Season also unchanged at £80. Near-term prices, such as the UK Gas NBP spot and UK Power Base spot, experienced slight decreases, with NBP spot down to 109p and Power Base spot rising modestly to £112. As colder weather continues to dominate forecasts, demand from conventional generators has increased, influenced by low renewable outputs—a trend reflecting similar patterns in Germany’s current “Dunkelflaute,” marked by low wind and solar generation.
Broader market factors also add complexity. Brent Oil is stable at $72, while EUA carbon credits remain at €68. The Henry Hub and JKM natural gas prices show minor fluctuations, with Henry Hub at $2.91 and JKM trading at $13.57. The broader context includes colder weather expected to persist across Europe, pushing storage withdrawals and affecting European stocks, which are approximately 6% lower than this time last year. This dynamic, combined with robust Asian LNG demand, signals tight competition for supply as we move further into winter.