Energy Market Update - 30 October 2024
The energy markets saw mixed movements today, with UK power prices supported by lower wind output, while natural gas prices edged lower amid steady flows from Norway and robust European storage levels.
In yesterday’s session, UK wholesale natural gas spot prices decreased across most European hubs due to mild temperatures and stable Norwegian gas flows, which totalled 334.9 mcm/day. Despite a slight increase in flows from the Norwegian shelf, the Dutch TTF Summer-25 contract traded at a premium over Winter-25 for the first time in nearly two years. UK gas prices closed at 107.22 p/therm for the front month contract, reflecting minor gains from the previous close. On the power side, UK day-ahead prices rose to £104.41/MWh due to lower wind generation, which prompted higher gas-fired power generation.
Today, the UK gas system opened oversupplied by 7 mcm/day, supported by increased flows from the Langeled pipeline at near-capacity levels. However, limited wind output forecasted at 1.8 GWh due to low wind speeds is expected to lift the demand for gas-fired power. LNG supply remains steady with three cargoes inbound to the UK, ensuring supply security. On the international stage, oil prices rebounded to $71.12/bbl amid easing tensions in the Middle East. Meanwhile, reports of North Korean troops heading to Russia mark a potential escalation in the Ukraine conflict, adding to the geopolitical uncertainties.
European gas benchmarks, including the TTF, have shown fresh highs amid forecasts of colder temperatures aligning closer to seasonal norms. Despite this, storage levels remain solid, with Pan-European gas storage standing at 95.32%, above the EU’s target of 90% before November. Market participants are closely monitoring developments in the Middle East and the upcoming US elections, which may impact both energy and foreign policy. The NBP front month contract traded at 105.60 p/therm earlier today, reflecting a slight decrease from yesterday's close.
UK power prices remained mixed with ongoing outages on the IFA2 and ElecLink interconnectors between the UK and France, further pressuring gas-fired power generation to meet the demand. The spark spread turned positive for the first time since February, gaining £1.48/MWh. The market remains fundamentally well supplied as attention turns towards November and potential fluctuations in weather forecasts.