Energy Market Update - 31 May 2024

The energy market saw gains driven by increased Norwegian flows and strong renewable forecasts.

Wholesale natural gas spot prices rose across the continent in the previous session, bolstered by increased nominations from Norway, now at 291 mcm/day despite an unplanned maintenance at Kollsnes. Gas and power prices climbed, with the July JKM contract reaching $12.188/MMBtu due to heightened Asian demand. EU storage levels stand at 69.27%, though LNG imports to Europe are 30% lower than last year.

Today, the UK system opened balanced, with Norwegian exports at 301 mcm/day. UK LDZ demand is forecasted lower due to rising temperatures, but prices strengthened with the Jun-24 contract at 85.50 p/th, up 1.60 p/th. Bearish factors include strong renewable generation and Germany's removal of a transit gas levy, increasing central and eastern European imports.

The UK system remains balanced at 2 mcm long. Total demand is 145 mcm, 55 mcm below seasonal norms. LNG and UKCS nominations are consistent with earlier this week. Langeled’s nominations improved to 47 mcm. Gas for power generation is low at 6 mcm due to strong UK wind generation. Temperature forecasts dropped overnight, now expected to be 3 degrees below seasonal norms next week.

The TTF Front Month contract is stable at €35, with the NBP Front Month contract at 85 p. Key contracts include the UK Gas NBP spot at 87 p, and UK Power DA at £69. Brent Oil is at $82, and EUAs at €75.