Energy Market Update - 23 September 2024
Gas and power prices have opened higher today, driven by short supply in the UK and increased demand due to cooler weather.
Gas prices rebounded during Friday’s session, with NBP Day-Ahead settling at 83.25 p/therm. Norwegian supply constraints due to extended maintenance supported this rise, alongside ongoing uncertainties around gas transit deals between Ukraine and Azerbaijan. The unconfirmed nature of these agreements caused markets to recalibrate. Meanwhile, an increase in LNG demand in Asia has reduced global supply flexibility, adding further pressure to prices.
In the power market, UK Day-Ahead Base prices rose to £75.00/MWh. This reflects higher demand linked to cooler weather, which increased UK gas consumption for heating. Though windspeeds are forecast to rise later this week, reducing the need for gas-fired generation, current lower-than-expected flows from Europe, due to BBL pipeline maintenance, have strained supply. The system opened 9 mcm/day undersupplied, with storage withdrawals and Rough injections remaining minimal.
Looking ahead, cooler temperatures across North-West Europe and the UK are expected to keep demand elevated into early October. Norwegian flows are recovering after recent outages, but ongoing geopolitical tensions, particularly in the Middle East, are pushing up Brent crude prices, which settled at $74.49 per barrel. These factors, combined with a tight supply outlook, are likely to sustain the current bullish trend in the energy markets.