Energy Market Update - 12 December 2024
Natural gas and power prices are softening today as strong wind output, mild temperatures, and reduced demand weigh on markets, offsetting earlier volatility.
In the natural gas market, the NBP spot price sits at 102.20p/therm, with European hub prices showing similar declines. The Dutch TTF spot is reported at €41.06/MWh, and the German THE spot is at €42.04/MWh. This downward pressure comes as robust LNG arrivals and high European gas storage, now at 80.9%, ensure supply security. Norway continues to face intermittent outages, such as at the Nyhamna gas field, where around 30mcm/day is restricted. Despite this, Norwegian flows to the UK remain stable at 330mcm/day.
On the power side, UK spot base prices are elevated at £92.86/MWh, though this reflects recent subdued wind generation. A significant boost in renewable generation is expected in the coming days, with UK wind output forecast to climb to 17GW, alleviating supply tightness. European power prices are similarly under pressure, with the German spot base reported at €101.23/MWh and French prices higher at €109.47/MWh. The forecasted rise in wind output across Europe, alongside milder temperatures—up to 6°C above seasonal averages—has sharply reduced heating demand, particularly in the UK, Germany, and the Netherlands.
Geopolitically, gas market focus remains on OMV’s termination of its long-term contract with Gazprom Export due to ongoing disputes. However, Russian flows through Velke Kapusany and Sudzha remain steady, providing a degree of market reassurance. LNG cargo arrivals are strong, with ten UK deliveries expected before year-end, supporting ample supply levels amid falling demand.
Overall, the outlook remains bearish for near-term gas and power prices, driven by weather forecasts predicting sustained warmth and wind generation leading into the festive period. Brent Crude, meanwhile, has eased to $73.52/bbl after last week’s rally, with profit-taking ahead of key economic decisions adding further pressure.