Energy Market Update - 03 June 2024

The NBP market opened bullish this morning, driven by the outage at Nyhamna, which has significantly restricted gas flows.

Nyhamna's unplanned outage, taking 79mcm offline, has led to reduced flows through Langeled to the UK, now at just 2mcm. This restriction has resulted in a 17.5mcm shortfall in the UK system, necessitating withdrawals from storage to compensate. Demand is trailing the seasonal norm by around 77mcm.

The weather outlook for the UK shows mixed conditions with cooler temperatures expected from Wednesday, falling below seasonal norms until mid-June. Wind generation is forecasted to increase above seasonal levels from Tuesday into the weekend, which should help offset some of the increased gas demand due to lower temperatures.

Contract movements this morning indicate a rise in the TTF Front Month to €36, up €2 from the previous settlement. The NBP Front Month is trading at 91.50p/therm. UK gas spot prices have increased to 89p/therm from 87p/therm, while UK power prices show the Front Month Baseload contract at £77, up from £73.

Overall, despite the Norwegian outages and cooler weather, the market remains stable with sufficient storage levels and anticipated LNG arrivals ensuring supply security.