Energy Market Update - 17 July 2024

The energy market saw a slightly bullish move yesterday driven by news of reduced capacity from Freeport LNG. This morning, the market is trading in line with yesterday's close.

Yesterday, the NBP Front Month contract for August-24 rose to 76.25p/therm from 72.24p/therm. The UK system has flipped and is short this morning, with a 2mcm shortfall in supply due to a drop in Langeled flows from 73mcm to 67.9mcm. Gassco reports significant maintenance at the end of August, potentially reducing UK flows further. TTF Front Month settled at €32.80 from €31.37 and trades at €33 this morning, unchanged from yesterday's close.

Brent oil prices fell to a one-month low of $84/bbl due to weaker demand from China and a strong US dollar, which hampers US exports. The UK power market followed gas, with the Front Month Baseload contract rising to £67/MWh from £64/MWh, and the Front Season contract increasing to £85/MWh from £83/MWh. EU gas storage remains robust at 81.38% full.

Key contracts show NBP spot at 76p/therm from 71p, and UK Power DA at £77/MWh from £71/MWh. Russian gas flows through Velke Kapusany and Sudzha remain stable, while Nord Stream stays offline. No unplanned outages were reported, with stable flows observed at 334mcm.

Overall, the market is balanced this morning. Despite lower LDZ demand, strong gas-for-power demand persists. Wind generation is expected to rise, reducing gas-for-power demand into the weekend. Norwegian flows remain stable, with no inbound LNG cargoes to the UK. Exports to the continent continue through IUK and BBL pipelines. Brent crude and WTI edged lower early today due to weak Chinese economic data and persistent Middle East tensions.