Energy Market Update - 12 July 2024

The energy market remains relatively stable today, with minor fluctuations observed across key contracts despite ongoing supply challenges and varying demand factors.

NBP prices are nearly unchanged from yesterday's close, with the front month August 2024 contract at 72.15p/th, a marginal drop of 0.05p/th. Despite recent bullish influences, supply and demand fundamentals retain a bearish outlook. The Freeport LNG terminal remains offline following a hurricane and power outage, while oil markets gain support from a significant drawdown in US inventories and lower US inflation, hinting at potential Federal Reserve interest rate cuts.

The UK system has opened 8mcm/day long, with increased Norwegian exports and steady UKCS receipts. The current total UK LNG send-out remains stable at 9.4mcm/day, and European storage levels have reached 80.09%. Wind generation is expected to drop this weekend, increasing CCGT demand. Asian markets continue to divert LNG vessels from Europe, with the UK anticipating only one vessel next week.

European and UK natural gas spot prices rose in the previous session due to Norwegian asset curtailments and high temperatures across central Europe, which boosted cooling demand. Unplanned outages at Asgard and Karsto have reduced supply, while JKM benchmark prices increased slightly to $11.795/MMBtu due to rising temperatures in Japan. UK power prices followed the gas market trend, showing decreases along the curve.

Today, the TTF Front Month contract is stable at €31, and the NBP Front Month contract is at 72.17p. UK power traded lower on Friday, influenced by NBP gas prices. The IFA1 interconnector between the UK and France has reduced capacity due to an unplanned outage. Brent oil remains steady at $85.40/bbl, coal at $109.26/tonne, and EUA carbon at €68.37/tonne. The GBP/EUR exchange rate is 1.1862.