Energy Market Update - 21 October 2024
Energy prices saw slight declines on Friday, with bearish sentiment driven by lower gas and oil prices amid strong storage levels across Europe.
UK gas prices, however, opened higher today, with the November 2024 Front Month contract rising above 99p/therm, up over 1p from Friday’s close. Despite UK gas demand being 9mcm below seasonal norms at 190mcm, the system remains 9mcm short due to reduced LNG send-out (11mcm) and only two LNG cargoes expected by the end of the month. Norwegian flows via Langeled have increased to 67mcm following the resolution of the Oseberg outage, while healthy injections into storage continue at 46mcm. The TTF Front Month contract opened higher this morning, trading at €40, up €1 from Friday’s settlement.
Electricity prices in the UK were impacted by strong wind generation over the weekend, causing spot prices to drop to low or negative levels during certain hours. However, wind output is now declining following the passage of Storm Ashley. The UK Baseload power contract settled at £85/MWh, down from £86, while the Front Season contract remained steady at £73/MWh. Temperature forecasts have turned milder, with temperatures expected to stay above seasonal norms into next week, reducing short-term demand for both gas and electricity.
In other markets, Brent Crude prices edged higher to $73.47/barrel over the weekend after dropping 7% last week due to weak demand forecasts for China and easing geopolitical tensions. European carbon allowances (EUAs) fell slightly to €62/tonne on Friday, contributing to the overall bearish tone in energy markets. Global LNG prices also softened, with JKM trading at $13.28/MMBtu, and the TTF-equivalent price at $12.48/MMBtu, while Henry Hub gas prices fell to $2.26/MMBtu.
Overall, with no significant disruptions in gas flows and steady LNG arrivals expected, the market remains well-supplied. The combination of mild temperatures, strong wind generation, and healthy storage levels in both the UK and EU suggests stability as we move deeper into autumn, despite minor short-term fluctuations in gas and power prices.