Energy Market Update - 14 June 2024

The energy market has opened slightly down today, with the NBP Front Month contract trading around 83.80p/therm. This movement is influenced by ongoing supply concerns and planned maintenance activities.

The UK gas system is currently 8mcm long, despite cooler-than-average temperatures which are keeping LDZ demand higher than expected. Wind generation remains strong, helping to limit the prompt gas demand for power, although levels are expected to drop next week. The FM July 24 NBP contract is at 83.80p/therm, while the UK DA Base power price is at £70.66/MWh.

Supply concerns are driven by the outage at Australia's Wheatstone LNG platform, which is expected to continue for several weeks. This outage tightens the global LNG balance at a time when some parts of Asia are experiencing warmer-than-seasonal temperatures, increasing demand for cooling. Additionally, the extension of maintenance at Norway’s Visund platform is curbing flows by 15mcm/day until 23rd June.

Market prices reflect these supply constraints. The NBP Day-Ahead gas price has seen minor decreases to 88p/therm. Meanwhile, the TTF Front Month contract dropped to €35/MWh, down €1 from the previous settlement. On the power side, the UK Front Month Baseload contract remains stable at £76/MWh, with future forecasts showing mixed wind speeds over the coming weeks.

Brent oil prices are holding at $82.75/bbl, supported by an OPEC demand growth forecast despite mixed economic data from the US. EU ETS carbon prices are at €70.71/tonne. The JKM benchmark rose by 5.6% to $13.37/MMBtu due to uncertainties around the Wheatstone LNG outage. The overall market reflects cautious optimism tempered by supply concerns and varying weather conditions.