Energy Market Update - 15 October 2024
Gas and power prices dipped in today’s session due to improved Norwegian gas flows and rising temperature forecasts.
Natural gas prices rose in the previous session as Norwegian supply disruptions and geopolitical tensions drove bullish sentiment. The National Balancing Point (NBP) Day-Ahead price settled at 97.60p/therm, while power also increased, with the UK Day-Ahead Base price closing at £87.12/MWh. The market reacted to unplanned outages at the Oseberg and Gullfaks fields, while a delayed restart at Kristin further limited Norwegian output. As a result, European gas hubs saw a slight uptick, although milder weather tempered demand. Market participants also pointed to stronger oil prices as Brent settled at $77.46/bbl, reinforcing the gas curve.
This morning, the UK gas system opened short by 14 million cubic metres (mcm), but prices opened lower, with the November-24 NBP contract falling below 100p/therm. Despite ongoing maintenance issues in Norway and reduced Langeled flows, forecasted milder temperatures across Europe have lessened demand pressure, particularly for heating. Total Norwegian exports have increased to 326mcm/day, up from 316mcm/day, as Kristin field output returned. UK gas supply is expected to benefit from several LNG cargoes arriving soon, but low wind generation yesterday boosted gas-for-power demand.
European storage remains robust, with levels at 95.07% full, providing a buffer against potential supply disruptions. Wind generation forecasts are set to rise later this week, which should alleviate some pressure on gas demand for power. In the wider energy complex, carbon prices increased to €65.97/tonne, while coal remained steady at $127.79/tonne. Despite these developments, market sentiment remains cautious as the Middle East conflict and tensions between Russia and Ukraine continue to create uncertainty in energy markets.