Energy Market Update - 25 November 2024
Energy markets softened on Friday, reflecting lower demand due to mild weather and increased wind generation in the UK. European gas storage levels remain under scrutiny.
Friday concluded a week of volatile trading, with power and gas prices retreating slightly from Thursday’s highs. UK Front Month Baseload power dropped to £96/MWh (£99), while NBP Front Month gas settled at 116.99p/therm, down from 120.90p. Spot markets also saw bearish trends, with UK gas trading at 108p/therm (from 122p) and power at £63/MWh (£105). This decline coincides with forecasts of average wind generation reaching 12GW in early December, exerting downward pressure on spark spreads for near-term contracts. Over the weekend, Storm Bert’s high winds pushed UK electricity prices negative during certain hours.
Despite the recent declines, European gas markets remain elevated amid geopolitical tensions and winter concerns. TTF Front Month gas closed at €47.02/MWh on Friday (€48.30) and opened unchanged today. EU gas storage levels dropped slightly to 87.89% full, reflecting steady withdrawals. Russian gas flows via Sudzha and Velke Kapusany pipelines are consistent but subdued, while Nord Stream remains offline. Norwegian flows improved to 339.9mcm/day following the resolution of the Karsto processing plant outage, further stabilising the supply landscape.
In the UK, mild weather has reduced heating demand significantly, with total consumption 25mcm below seasonal norms at 229mcm/day. However, the system remains well-supplied, aided by ten LNG cargoes expected in the coming weeks. This influx supports the UK as a premium market, but year-on-year LNG imports remain 21.4% lower in October. As temperatures cool midweek, demand is expected to rebound slightly, with longer-term forecasts indicating a colder December and January, potentially lifting Q1 2025 prices.
Other markets exhibited mixed trends. Brent crude rose modestly to $75/bbl ($74), while EUA carbon prices eased to €69/tonne (€70). JKM LNG prices increased to $14.79/MMBtu ($15.08), influenced by potential export disruptions. The balance between mild short-term weather and long-term bullish risks continues to shape the energy market outlook.