Energy Market Update - 19 September 2024
The energy markets saw minor fluctuations in yesterday's session, with participants trying to assess the next direction after recent volatility.
Geopolitical tensions, including unrest in the Middle East and the ongoing Ukraine-Russia conflict, continue to be closely monitored. The TTF Front Month contract settled slightly lower at €35.25, down from €35.55, while the NBP Front Month saw a dip to 84.28p from 85.21p. Notably, NBP spot prices remained higher at 83.35p/therm, diverging from other European hubs as Norwegian exports to the continent increased after maintenance eased. Gas flows from Norway to the UK fell slightly, with total UK Continental Shelf receipts flat. EU gas storage remains high at 93.41%, with three LNG tankers expected in the UK over the next four weeks.
Gas prices rose in early trading today, with the TTF Front Month up €1 at €36 and NBP Front Month trading higher at 86.35p. On the power side, UK Day-Ahead prices fell to £79.28/MWh, with curve prices edging lower across the board. The UK Baseload contract for the Front Month held steady at £70/MWh. MRS nominated withdrawals of 26mcm/day, and Rough storage returned from maintenance with injection nominations. In contrast, European power markets saw coal prices rise to $115.03/tonne (ARA CIF Cal Y+1), while EUA carbon prices dipped slightly to €63.70/tonne.
In the wider energy market, Brent Oil remained steady at $73.65 per barrel for the Front Month, firming slightly after the US Federal Reserve cut interest rates by 0.5%. This move boosted hopes for increased demand, particularly in the US, leading to upward pressure on oil prices. Despite this, natural gas for power demand in the UK is expected to decrease, with an oversupplied UK system opening 3mcm/day long.
Currency movements also played a role, with GBP/EUR trading at 1.1873, influencing procurement costs. The outlook remains mixed as traders weigh supply security from ample gas storage against geopolitical and economic risks. However, the arrival of LNG cargoes and resumed storage injections suggest some short-term stability.