Energy Market Update - 21 May 2024
The market opened oversupplied due to high terminal receipts, while Norwegian maintenance continues to impact flows.
The UK system opened 34 mcm/day oversupplied this morning. With temperatures expected to be above the norm for the rest of the week, Day-Ahead Gas for Power demand dropped by 13 mcm/day to 29 mcm/day amid stronger winds, which are expected to subside by Thursday. Total terminal receipts at the UK continental shelf are at 102 mcm/day, despite Barrow being shut down and curtailments at St Fergus and Teesside of 2.5 mcm/day and 5 mcm/day, respectively. Medium range storage, which saw zero flows yesterday, has nominated a significant 20 mcm/day of withdrawals today.
The market remains sensitive due to the planned shutdown of Norwegian assets Kollsnes and Troll, affecting approximately 180 mcm/day. These outages contributed to an upwards movement in yesterday's session, with the TTF Front Month contract settling at €31.77 (from €30.77) and the NBP Front Month contract at 76.70p (from 74.36p). Today, with many of these assets offline, flow levels are significantly impacted.
No unplanned outages were reported this morning, with flow levels at 179 mcm (down from 317 mcm). Russian nominations remain stable, while Nord Stream stays unavailable. EU gas storage is 67.15% full, and four LNG vessels are expected in the UK in the next couple of weeks. The Front Month TTF contract remains at €32, unchanged from the previous settlement. Key contracts show slight increases, with the NBP spot at 79p (from 76p) and UK Power DA at £80 (from £75).
UK power prices are up, with the Front Month Baseload contract at £70 (from £67) and the Front Season at £88 (from £85). Brent Oil is stable at $84, EUAs have risen to €74 (from €71), Henry Hub increased to $2.75 (from $2.63), and JKM dropped significantly to $1.51 (from $11.05), equating to a TTF Equivalent of $10.12 (from $9.81).
Low wind generation and anticipation of Norwegian outages pushed NBP prices upwards, despite the UK system being 32 mcm long this morning. Reduced flows from Norway are balanced by increased storage withdrawals and LNG flows. Temperatures are set to cool by the end of the week, with long-term forecasts predicting warmer, calmer conditions.