Energy Market Update - 09 December 2024
The European energy markets opened lower today, influenced by healthy supply levels, strong LNG arrivals, and lower seasonal demand across most regions.
Natural gas spot prices have declined across European hubs, reflecting bearish supply fundamentals. The UK NBP spot price has risen to 114.90p/therm, while the TTF spot price dropped slightly to €45.92/MWh. This softness stems from mild temperatures and robust LNG schedules, with multiple shipments expected at key terminals this week. Despite current above-average temperatures in the UK and France suppressing heating demand, a colder spell is forecasted in North-West Europe, particularly in Germany and the Netherlands, where temperatures may fall 3°C below average. Norwegian exports remain steady, and ongoing high LNG supply should alleviate concerns regarding the colder conditions expected later in the week.
Power markets saw mixed movements today. UK base power prices declined to £66.10/MWh, while German and Dutch spot prices fell to €71.51/MWh and €66.27/MWh, respectively. In contrast, longer-term contracts saw some gains, particularly in France and Germany, as nuclear availability in France climbed to 51GW, offsetting weaker renewable generation expected mid-week. German wind output, for instance, is projected to drop from 35GW today to just 7GW by Wednesday. Meanwhile, the return of Germany’s Lippendorf lignite plant on 13 December should provide additional grid stability during reduced renewable output.
Geopolitical factors remain relatively stable, though developments in Syria, with the government facing a regime change, introduce a new layer of uncertainty for energy markets. Oil prices edged lower to $71.12/bbl following reduced tensions in the Middle East. In the broader picture, the EU continues to manage high gas storage levels, currently at 82.38%, though the faster withdrawal rates this season raise concerns over sufficiency by the end of winter. Looking ahead, forecasts indicate below-average temperatures and potential increases in gas-for-power demand as wind generation decreases.