Energy Market Update - 15 November 2024
Energy markets saw an uptick yesterday, with natural gas prices rising significantly, driven by geopolitical tensions and forecasts of colder-than-average temperatures across Europe.
Natural gas markets were heavily influenced by the arbitration ruling favouring Austria’s OMV against Gazprom, awarding €230 million in damages. Concerns that Gazprom may retaliate by reducing supplies to Austria added to market bullishness. The NBP Day-Ahead (DA) price climbed to 116.75p/therm, reflecting a 5% increase in recent sessions. Seasonal cold snaps and sub-average temperatures further supported demand expectations. Norwegian flows remain steady at 343 mcm/day, providing some supply stability. EU gas storage levels dropped to 92.10% but remain comfortably above historic averages, with four LNG cargoes set to bolster UK supply.
UK power prices rose, influenced by higher gas prices and reduced renewable output due to cloudy weather conditions (dunkelflaute) earlier this month. Day-Ahead Baseload electricity settled at £101.00/MWh. While wind speeds are expected to increase over the coming week, providing some relief to gas-reliant generation, nuclear capacity in the UK will decline temporarily due to planned maintenance. This reduction may tighten the electricity supply balance, especially during colder evenings, further supporting prices.
In other markets, Brent crude oil saw downward pressure, settling at $72.56/bbl, reflecting weak Chinese demand and a less aggressive US monetary tightening outlook. EU carbon allowance prices (EUA Dec-24) rose to €68.27/tonne, supported by higher gas-to-power switching. Meanwhile, coal prices remain elevated at $125.39/tonne as European markets prepare for increased winter demand. The GBP/EUR exchange rate edged up to 1.2025, adding marginal downward pressure on euro-denominated commodities for UK buyers.
The market remains volatile as participants monitor geopolitical developments, cold weather forecasts, and supply flows. With LNG arrivals expected and wind generation improving, short-term pressures may ease, but uncertainties around Russian supply and colder temperatures continue to dominate market sentiment.