Energy Market Update - 10 July 2024

Energy markets continued to decline on Tuesday due to strong supply fundamentals and lower seasonal demand.

UK natural gas prices softened with NBP Front Month closing at 72.79p/therm, down from 75.00p/therm. This bearish trend was influenced by an uptick in Algerian gas flows into Spain and Italy, stable Norwegian supply at 334 mcm/day, and resumed feedgas to Freeport LNG post-Hurricane Beryl. Robust European storage levels at 79.55% and easing Asian prices also contributed to the downward movement.

UK power prices tracked the gas market lower, with the UK DA Base at £66.67/MWh, influenced by higher wind generation and stable nuclear output. The system remained comfortable, opening 13 mcm/day long, with LDZ demand flat and strong continental exports via IUK and BBL. Two nuclear reactors, accounting for 1.1 GW, are under maintenance, with additional outages scheduled. Windspeeds are expected to fall over the next two weeks, impacting wind generation.

Brent oil prices showed minor fluctuations, settling at $84.66/bbl. The coal market remained stable at $110.45/tonne, while carbon prices were steady at €68.56/tonne. The GBP/EUR exchange rate stood at 1.1836. These stable conditions in other fuels reflected a balanced market, despite minor shifts.

Overall, the market outlook remains stable with ample gas supplies and high storage levels countering lower seasonal demand. LNG imports, continued robust Norwegian and UKCS production, and moderate weather forecasts support this stability. As the market adjusts to these factors, prices are expected to remain relatively steady.