Energy Market Update - 13 June 2024

UK natural gas futures surged over 5% to 85 pence a therm, driven by European price increases following Uniper SE's substantial damages from Gazprom PJSC.

Yesterday's session saw European and UK natural gas spot prices increase amid tight supply and minor outages. The NBP day-ahead contract rose by 2.56p/th despite stronger flows from Norway, with total exit nominations reaching 337mcm/day, the highest since April. Curve prices rallied due to concerns over the Wheatstone LNG facility outage and increased buying interest in the Asia-Pacific region. Power prices followed gas sentiment, with Pan-European storage levels at 72.33%.

Today, the UK system opened 9 mcm/day oversupplied, despite below-average temperatures. An outage on the UKCS has extended to 15 June, with Dimlington maintenance starting tomorrow, affecting 5 mcm/day until 28 June. UK LNG sendout remains unchanged, and nominated exports to the continent are stable. Temperatures are forecast to remain below seasonal averages until 22 June, with mixed wind speeds expected. One LNG cargo is scheduled to arrive at Milford Haven on 23 June.

In the broader market, the TTF Front Month contract settled at €35.29, and the NBP Front Month at 83.87p. EU gas storage injections have slowed, and extended Norwegian outages continue to affect supply. Political changes in the UK, US, and France could influence future energy policy. Brent oil is at $83 per barrel, with EUAs at €71 per tonne.

Overall, the market reflects cautious optimism moderated by mild UK weather reducing demand and maintaining supply balance. The complexity of the market is highlighted by ongoing supply concerns and geopolitical factors.