Energy Market Update - 02 July 2024

The UK gas market saw rising prices on Monday due to a short system and weaker Norwegian volumes impacting supply.

UK prices eased this morning, falling below 80p/therm, despite the system being 9mcm short with total demand at 156mcm. Temperatures remain cold, keeping demand slightly higher with LDZ demand at 62.5mcm. Weaker wind generation has increased CCGT demand by 10mcm.

Hurricane Beryl, a Category 5 storm, is expected to affect LNG terminals in the Caribbean and Gulf regions, potentially causing market volatility. EU gas storage levels are strong, over 77% full, while Visund's capacity remains halved due to ongoing outages. Yesterday, TTF Front Month settled at €33.49, and NBP Front Month at 78.30p.

Today, the UK system is 8mcm short. Norwegian exports to Vesterled are reduced, lowering UK flows to 82mcm/day. Barrow North's maintenance is extended, potentially returning 3-5mcm/day. Two UK nuclear units are set to be offline until 21 July, removing 1.2GW of capacity. MRS injections continue at 5mcm/day, and one LNG cargo is expected in the UK within nine days.

European natural gas hubs and UK NBP spot prices fell yesterday, with TTF DA down 3% and NBP down 1%. Strong winds in Germany and the UK are expected to limit fuel burn for electricity. Norwegian output was at 335.4mcm/day, with Visund still under maintenance. UK power prices tracked gas sentiment, with DA slightly rising. France's Tricastin-4 reactor is scheduled to return two weeks early, while Chooz-2 has restarted after an outage.