Energy Market Update - 24 October 2024
NBP gas prices have surged due to unplanned outages and low wind power output, pushing the front-month contract to multi-week highs.
UK gas contracts rose today as Norwegian gas flows reduced to 61 mcm due to ongoing issues at Sleipner and Oseberg fields. The Nov-24 contract for NBP closed at 105.80 p/th, reflecting an increase of around 2 p/th. Despite a long system with a 15 mcm oversupply, demand remains at 163 mcm, which is 40 mcm below seasonal norms. Additionally, low wind forecasts into next week are anticipated to increase gas demand for power generation, creating a bullish sentiment at the front end of the market curve. Meanwhile, UK day-ahead gas traded at 101.50 p/th, supported by these supply challenges and forecasted weak renewable output.
In the power market, UK day-ahead baseload electricity prices settled at £83.19/MWh. The UK front-month baseload contract saw gains of £2/MWh amid expectations of lower wind generation this week, which is set to average 8.4 GW, about 10-20% below seasonal norms. A similar trend was observed in Europe, where German power prices saw uplift due to expected sub-seasonal wind generation, averaging 9.8 GW next week. Meanwhile, Brent oil settled at $74.96/bbl, down slightly, reflecting ongoing market concerns around global demand.
European gas prices increased on Wednesday’s session as supply issues persisted. The TTF front-month contract closed at €41.38/MWh, up from €40.70, amid weak renewables and the ongoing outage at Sleipner B, following a fire incident. With Oseberg joining Sleipner, Norwegian exports to Europe remain constrained. Russian flows through Velke Kapusany and Sudzha held steady, with Velke Kapusany at 37.9 mcm and Sudzha at 42.2 mcm. European gas stocks are reported at 95.32% full, which, alongside stable LNG arrivals, offers supply confidence for the near term.
In other markets, carbon prices for EUA Dec-24 contracts settled at €64.89/tonne. The European Commission’s announcement of €4.8 billion in grants to support net-zero projects provided a modest boost to carbon markets. The FX market saw GBP/EUR trading at 1.2027 as of this morning. Elsewhere, coal prices traded at $123.67/tonne, reflecting stable demand amid rising gas prices.