Energy Market Update - 16 December 2024
Gas and power markets continued their downward movement on Friday, driven by warmer weather forecasts and increased wind generation expectations across Europe.
In the natural gas market, the NBP Front Month contract settled at 103.00p/therm (down from 106.18p), while the TTF Front Month closed at €41.22/MWh. This morning, prices have softened further, with the TTF contract trading at €40/MWh. Norwegian flows remain stable at 331mcm/day despite unplanned outages at Kollsnes and Karsto. Russian gas nominations also declined slightly, with flows at 38.2mcm/day through Velke Kapusany and 42.0mcm/day via Sudzha. EU storage now stands at 78.24%, reflecting increased withdrawals despite the mild weather. LNG send-out has dipped slightly, with 8 cargoes scheduled to arrive in the UK over the coming weeks, down from 11 previously.
The power market also saw sharp declines, with the UK base spot price falling to £65/MWh (from £157/MWh). UK Front Month baseload dropped to £89/MWh and the Front Season to £76/MWh. This was largely due to a significant uplift in wind generation forecasts, with UK wind output expected to exceed 17GW today. Across Europe, Germany’s wind generation is projected at 48GW, more than double the seasonal average, placing further downward pressure on power prices. Mild temperatures, up to 6–7°C above seasonal norms, have further reduced heating demand across the UK, Germany, and the Netherlands.
Looking ahead, focus remains on the capacity auctions for Russian gas transit through Ukraine, with the current deal set to expire on 31 December 2024. Market participants are closely monitoring whether any capacity will be booked for January, although no formal extension has been agreed. This uncertainty, combined with concerns over heavy storage withdrawals, continues to cast a shadow over Europe’s longer-term supply resilience.
In other markets, Brent Crude edged higher to $74.49/bbl on Friday, while carbon EUAs fell to €64.43/tonne. LNG markets remained bearish, with the JKM benchmark falling to $13.09/MMBtu. Overall, warmer temperatures, strong renewables, and improved supply continue to weigh heavily on gas and power prices as the market approaches the festive period.