Energy Market Update - 11 November 2024
The UK energy market closed last week on a bullish note, with colder weather forecasts and declining wind generation supporting gas and power prices. Gas-fired power demand is expected to rise as temperatures fall and renewable output remains weak.
UK gas prices gained support from colder weather outlooks, which now predict below-average temperatures through the end of the year. The NBP Front Month price closed on Friday at 107.41 pence per therm, up from 104.32 pence, as high storage levels (95%) begin to decline with the start of seasonal withdrawals. Norwegian gas output has stabilized following recent unplanned outages, with flows reaching 346 mcm/day this morning. LNG cargo arrivals remain steady, with three vessels scheduled for delivery to the UK by late November. Meanwhile, the EU’s storage levels have dipped slightly, sitting at 93.58%—lower than usual for this point in the season due to increased withdrawals across the continent.
Electricity prices have been similarly affected by supply dynamics and weather patterns. UK power prices saw gains for forward contracts, with the Front Month Baseload contract rising to £90/MWh, up from £87, while the Front Season contract increased to £78/MWh. Wind generation, forecasted to drop over 10% below normal this week, will likely prompt greater reliance on gas-fired generation to meet demand. The UK-France interconnector (ElecLink) is set to return on 15 November, with IFA2’s partial resumption scheduled for 14 November, though it will operate at reduced capacity, supplying only 0.5 GW through 17 November.
Market participants expect continued support for prices due to persistent weather-driven demand and weaker renewable output. The latest assessments show the TTF Front Month contract settled at €42.41, up from €41.28, with the NBP also rising. Spot contracts reflect stable to bullish sentiment, driven by weather forecasts and the current supply-demand balance, despite slightly lower UK gas demand this morning, which has opened the system 11 mcm long.
In global commodities, Brent oil remained steady around $74 per barrel as concerns over supply disruptions eased with the dissipation of Hurricane Raphael and resumed US production. European carbon allowances (EUAs) traded higher at €68 per tonne, reflecting tightening emissions limits. With colder weather and lower renewable generation anticipated, the energy markets continue to balance supply stability against rising demand.