Energy Market Update - 21 November 2024
Energy markets experienced an uptick yesterday, with colder weather persisting and higher demand driving price increases across gas and power contracts. Robust LNG supplies and steady flows from Norway tempered the impact.
Wholesale natural gas spot prices rose sharply, with the NBP Day-Ahead contract settling at 117.10p/therm. Forecasted UK system demand ranged between 248-332mcm/day, reflecting sustained cold weather across Northwest Europe. Norwegian flows to the UK stood at 106.9mcm/day, with total European nominations at 340mcm/day. Increased storage withdrawals supported higher demand, with European storage levels falling to 89.87%. Curve prices climbed amid geopolitical tensions, while unplanned outages at Norway’s Kårstø and Vesterled facilities curtailed 25mcm/day. LNG supply remained healthy, with nine vessels scheduled to arrive at UK terminals within the next two weeks.
UK power prices also rose, with the Day-Ahead Baseload price reaching £102.90/MWh, following movements in gas. The French nuclear output hit its highest level since January, exceeding 49GW, as EDF restarted its Cattenom-2 reactor. Colder temperatures and lower wind generation boosted power demand, while UK wind power forecasts showed strong output for the next five days before a decline. Carbon prices held steady, with EUA Dec 2024 closing at €68.38/tonne. The UK Front Month Baseload contract remained flat at £97/MWh, reflecting stabilising supply conditions.
Broader market influences included Germany’s announcement of a 20% increase in its gas storage surcharge starting January, potentially impacting European markets. Germany, with 94% of its vast storage capacity filled, remains a critical hub for continental energy security. On the geopolitical front, stable Russian flows at Sudzha (42.3mcm/day) and Velke Kapusany (41.3mcm/day) provided continuity despite elevated tensions. Brent crude prices eased slightly to $72.81/bbl, while coal remained steady at $126.25/tonne.
The energy market remains elevated amid robust demand and geopolitical risks. However, steady LNG supplies and falling temperatures by the weekend could help stabilise prices in the short term.