Energy Market Update - 29 May 2024

The UK gas market has opened slightly higher today after prices moved lower yesterday due to volatile trading.

The Jun-24 front month contract is currently pricing at 81.30p/th, 0.15p/th higher than last night’s close. Despite weaker demand, prices are supported by limited LNG deliveries to Europe, unplanned maintenance events, and strong oil markets. Brent oil prices have risen due to expectations of further OPEC production cuts, extending the current 2.2 million barrel per day cut into the latter half of the year.

The UK system is undersupplied by 9mcm with total demand at 134mcm, which is 69mcm below the seasonal norm. LNG send-out remains low, with only one cargo expected to arrive in early June. Reduced CCGT demand is offset by increased wind generation as we approach the weekend. In the previous session, the Dutch TTF day-ahead contract closed 0.95% lower at €34/MWh, while the UK NBP day-ahead contract dropped 1.36% to 81.49p/th. Despite below-average temperatures last week, upcoming days are forecasted to be warmer than the five-year average.

The UK system opened balanced today, with temperatures expected to remain above average. Terminal receipts at the UK continental shelf will increase by 10mcm/day, reaching 98mcm/day as outages at Bacton Seal are resolved. Norwegian exit nominations to the UK are up 7mcm/day, reaching 41mcm/day. Process problems at Kollsnes are expected to be resolved tomorrow, with maintenance at Kårstø ending on June 1. Gas for power demand is down by 11mcm/day due to increased wind and solar output. Medium range storage saw 3mcm/day of injections yesterday, with 0.4mcm/day of withdrawals today. EDF has extended the outage at its Flamanville 2 nuclear reactor by 44 days.