Energy Market Update - 16 September 2024
UK gas prices opened lower today, continuing last week’s decline, largely due to oversupply and weak demand despite ongoing geopolitical risks. The market remains stable, with downward pressure from both global production disruptions and easing tensions in Eastern Europe.
The UK gas system is currently oversupplied by 13 mcm/day as the Langeled pipeline returns from maintenance, increasing flows. However, unplanned outages at Norway’s Aasta Hansteen and Oseberg fields have slightly constrained supply. UK gas prices have softened, with the NBP Day-Ahead at 85.80p/therm and the front month October-24 contract at 83.30p/therm. The market has largely shrugged off earlier concerns stemming from European supply disruptions due to the lingering effects of storm Francine in the US Gulf, which impacted around a quarter of US natural gas production.
UK power prices remain stable with the Day-Ahead Base price at £62.60/MWh. Wind generation is below seasonal levels, and while temperatures are forecasted to rise above normal this week, limiting demand, supply remains balanced. Friday’s session saw slight increases in power prices, with the Front Month Baseload now at £73/MWh. Geopolitically, sentiment is impacted by the potential for continued volatility as the UK and Europe assess energy security against the backdrop of Russian threats to cut supply in response to NATO’s support for Ukraine.
Brent oil prices are stable at $71.61/bbl, with limited movement as global demand remains steady. Tensions between Russia and the West could trigger further instability in oil and gas markets, but for now, the market seems to be pricing in a reduction in immediate risk. Meanwhile, carbon prices (EUA Dec-24) are at €64.99/tonne, and coal prices (CIF ARA) remain steady at $116.51/tonne.