Energy Market Update - 18 November 2024
Energy markets are mixed as the fallout from Gazprom’s brief suspension of gas supplies to Austria causes ripples, alongside increased demand from colder-than-average weather across Europe.
The market ended last week on edge after Gazprom announced it would halt gas deliveries to Austria in response to OMV’s arbitration action, which awarded the latter €230 million. Prices reacted sharply on Friday, with the TTF Front Month contract settling higher at €46.55, while the NBP Front Month edged to 117.47p. However, flows resumed over the weekend, and market sentiment stabilised by Monday morning, with TTF trading down €2 at €45 and the NBP Front Month holding at 117p. LNG cargoes en route to the UK are set to ease some pressure, with seven arrivals expected in the coming weeks.
Colder temperatures are driving up demand across the region. UK gas demand rose to 270mcm today, 26mcm above seasonal norms, as heating and power generation requirements surged. The UK’s NBP spot gas price remains relatively stable at 114p/therm. Meanwhile, power markets saw a modest rise, with the UK Front Month Baseload contract at £96/MWh and the Front Season at £84/MWh. Wind generation remains low, but forecasts suggest an improvement later in the week. Nuclear maintenance scheduled for midweek could temporarily tighten the power supply.
Geopolitical factors continue to influence the market. Russia’s brief halt to Austria’s gas supply and ongoing Ukrainian infrastructure damage add layers of complexity. EU gas storage remains robust at 90.99%, though below last week’s 92.10%. Globally, Brent crude declined to $71/bbl, reflecting weaker demand signals, while European carbon prices held steady at €68/tonne. In the broader energy landscape, commitments made during the recent climate conference underscore the push towards renewable energy and storage systems by 2030.
Markets face a volatile period with cold weather and geopolitical risks at the forefront, tempered by LNG inflows and secure storage levels. The balance between immediate demand pressures and structural resilience will dictate price movements as winter approaches.