Energy Market Update - 24 May 2024
The energy market has shown upward movement due to increased Norwegian exports and higher Asian LNG prices.
The UK system opened 10 mcm/day undersupplied this morning, with domestic consumption remaining flat. Temperatures are forecasted to be above average as June starts, and gas for power demand is expected to drop with rising wind levels. Norwegian exports to the UK increased by 10 mcm/day to 37 mcm/day due to higher export capacity. The available capacities at Troll and Kårstø are expected to increase by 5 mcm/day each today. Two LNG cargoes are set to arrive in the UK, with three more to the continent, while Zeebrugge undergoes a two-day closure and Wilhelmshaven reduces capacity by half due to maintenance. Asian LNG prices rose sharply, with the July JKM settling at USD 12.26/MMBtu, the highest since December 21.
Going into the rest of the week, temperatures are expected to be 2 degrees above the norm. Terminal receipts at the UK continental shelf will increase by 12 mcm/day as unplanned outages at Bacton Seal conclude. However, heavy maintenance on the Troll Field and Kollsnes processing plant will reduce Norwegian exit nominations tomorrow, making the market more sensitive to any issues. The market also faces uncertainty following the death of Iran's President and Foreign Minister in a helicopter crash, though the market response has been muted so far.
Today, Ofgem confirmed the upcoming domestic price cap to be £1,568, effective 1st July, marking a 7% reduction from April's cap. The TTF Front Month contract settled at €35.23, and the NBP Front Month contract at 85.33p. This morning, the TTF Front Month contract remains unchanged at €35. Key contracts show the TTF Front Season at €40 and the NBP Front Season at 105p. UK Gas NBP spot is at 87p, while UK Power Day-Ahead is at £86. UK Front Month Baseload power is at £77 and the Front Season at £94.
Brent Oil stands at $81, EUAs at €76, Henry Hub at $2.66, and JKM at $12.26. Prices continued their bullish trend on Thursday, with gains on near curve and seasonal contracts due to unplanned Norwegian outages, low wind, and potential Russian supply disruptions. The UK system traded short throughout the day, and wind generation is expected to boost next week with more unsettled weather.