Energy Market Update - 26 June 2024

A small uptick in prices across the board was seen in yesterday’s session, driven by ongoing issues at Equinor's Hammerfest LNG terminal.

UK NBP gas prices continued their recovery on Tuesday, supported by a downward revision in UK power for most of July which is likely to increase CCGT usage. Wind generation in the UK is expected to be 5.3GW during July, 1GW lower than seasonal normal. The TTF Front Month contract settled at €34.85 (from €34.08) and the NBP Front Month contract at 81.59p (from 79.69p). Gas flows remain stable with minor fluctuations in Russian nominations and ongoing outages at Visund. EU gas storage is at 75.56% capacity, and one LNG vessel is expected to arrive in the UK in the next two weeks.

UK power prices rose in line with gas, with the UK Carbon price lifting £1.64/tCO2, which supported the far curve. The UK Front Month Baseload contract stands at £74 (from £72) and the Front Season at £89 (from £88). Today, UK Day-Ahead power prices are £80/MWh (from £83). The ongoing issues at Equinor's Hammerfest LNG terminal continue to affect the market.

Oil prices eased by 1% as the market weighs summer driving demand against U.S. inflation data. Despite the anticipation of increased demand due to the U.S. summer driving season, high gasoline stocks and weak demand indicators have caused market jitters. Brent oil prices are at $85/bbl (from $86).

In other market movements, UK power prices reflect cautious optimism with mild weather reducing demand and maintaining supply balance. The UK's continued support for gas-powered stations suggests a pragmatic approach to energy security. Today’s TTF Front Month contract remains unchanged at €35. Key contracts show TTF Front Season at €39, NBP Front Month at 82p, and NBP Front Season at 101p.