Energy Market Update - 01 July 2024

UK gas prices opened higher this morning due to a short system, despite total demand remaining below the seasonal average.

Total UK demand is at 158mcm, 5mcm higher than Friday, with supply restrictions from Norwegian imports at 50mcm and UKCS at 31mcm. Temperatures across the UK and Europe are expected to fall below seasonal averages this week, increasing demand in the LDZ. Wind generation is expected to increase later this week, potentially offsetting the higher heating demand. Next week, temperatures are predicted to rise with a returning high-pressure system.

Oil prices have increased, reaching $86.41 following a report predicting record high oil demand in June at 104 million barrels a day. Wholesale natural gas spot prices in Europe experienced minor movements on Friday, with Norwegian pipeline exports reaching a two-month high at 343mcm/day. UK’s St. Fergus terminal saw increased deliveries, with total nominations at 23.3mcm/day. Gas curve prices were mixed with summer month products falling lower, while power prices saw small increases, notably the Sum-25 contract.

Today, the UK system opened 7mcm/day short due to reduced Norwegian flows from ongoing maintenance. Wind speeds are expected to increase, reducing gas demand for power. The UK has one LNG cargo inbound on 11th July, and more expected in North West Europe. Pan-European gas stocks are at 76.97%. TTF Front Month contract is at €34, unchanged from the previous settlement. NBP Front Month contract is at 81p, and the UK Gas NBP spot price is 81p. UK Power DA is at £81/MWh.