Energy Market Update - 11 June 2024
A bullish start to the week as markets rose across the board, driven by supply issues and weather forecasts.
In yesterday's session, European and UK natural gas spot prices lifted despite increased supply from Norway. Total exit nominations from Norway to the continent stood at 328mcm/day after the Nyhamna processing plant's return. Nominations into the UK's Easington terminal ramped up, reaching 62.6mcm/day. Gassco announced an unplanned outage at Visund until 17th June, but market participants cited a technical rebound as the primary reason for the price increases. Gas prices surged, followed by power prices.
The UK system opened 15mcm/day long this morning. Flows from Norway to the UK remained stable, with UKCS terminal receipts up from yesterday. Planned maintenance for the Easington terminal is set to start on 23rd June, with Langeled flows fixed at 57mcm/day until 3rd July. Mid-range storage nominates 5mcm/day of withdrawals, and exports continue via IUK and BBL due to the NBP DA discount to TTF DA. Pan-European storage is at 71.75%, supported by healthy injections. The latest EC46 forecast shows temperatures below seasonal normal until early next week, then rising above.
The UK gas market opened higher, with the front month Jul-24 contract at 82.50p/th, up by 0.50p/th from last night's close. Prices are supported by a poor LNG schedule and warmer weather in Asia, which could increase demand and divert cargos from Europe. The UK expects only one LNG cargo to Grain this week. Oil prices are also supporting energy markets due to forecasted supply struggles. The UK system is 12mcm oversupplied today following increased Norwegian imports. Temperatures are 4 degrees below seasonal normal, and wind generation has dropped slightly, lifting gas demand for power.
Key contracts showed notable movements: NBP DA at 82.63p/therm, UK DA Base at £73.78/MWh, Brent Oil at $81.63/bbl, Coal ARA CIF Cal Y+1 at $118.24/tonne, and EUA Dec 23 at €70.80/tonne. The GBP/EUR exchange rate settled at 1.1825. Overall, the market displays a complex but stable landscape as we transition into warmer months.