Energy Market Update - 30 September 2024
UK energy markets opened today with a rise in gas and power prices driven by supply concerns and geopolitical tensions. Ongoing maintenance, colder weather, and the escalation of the Middle East conflict are pushing prices higher as we move into the winter season.
UK natural gas prices have traded higher than the previous session, with the front-month October 2024 contract rising to 93.60p/therm, approximately 2p/therm above Friday’s close. The UK system has opened 13 mcm short, with total demand at 167 mcm, supported by lower temperatures, which are 1-2°C below the seasonal norm. LDZ demand is nominating at 103 mcm. Norwegian imports remain limited due to an unplanned outage at Asgard, which is restricting 7 mcm of gas flows. Traders are cautious, with concerns about weather-related risks and further geopolitical escalations as winter approaches.
UK power prices have followed gas higher, with day-ahead baseload prices rising to £76.80/MWh. Nuclear production continues to fall below capacity, with further reductions expected by the weekend. Wind generation is forecast to be strong in early October but is expected to weaken between 2-5 October. The closure of the UK's last coal-fired power station today marks a historic shift, as the country transitions to a greener energy mix. The spot price for power currently stands at £68/MWh, up from £54/MWh on Friday.
In broader energy markets, Brent crude has strengthened to $72.58 per barrel, reflecting the heightened geopolitical tensions in the Middle East. The ongoing airstrikes in Lebanon are adding to market nervousness, supporting the back end of the gas curve. Carbon prices are slightly down, with EUA Dec 2024 trading at €66.33/tonne. European gas storage remains strong at over 94%, but limited LNG inflows and ongoing supply risks from Norwegian and Russian flows add uncertainty as colder temperatures approach.
Markets remain on edge as winter nears, with the combination of colder weather forecasts, Norwegian supply issues, and global geopolitical events continuing to drive market movements.