Energy Market Update - 14 May 2024

The UK energy market saw broad declines in key contracts, with the UK power front month trading £0.69/MWh lower and the NBP prices falling due to high Norwegian flows and warm European temperatures. Crude, however, moved higher amid infrastructure damage in Russia and anticipated strong US demand.

UK power prices softened, influenced by reduced emissions costs and improved wind generation forecasts, pushing the associated spark down by £1.48/MWh. Norwegian pipeline flows to the UK increased to 325 mcm/day, contributing to lower UK NBP prices. Meanwhile, warmer temperatures across Europe, especially in Germany, further pressured gas prices.

The global energy landscape was affected by a Ukrainian drone attack on Russian oil infrastructure and optimistic demand forecasts in the US and China, lifting crude prices. In the UK, gas prices eased with a comfortable system and potential boosts in European supply, while total UK demand remained below the seasonal average due to above-average temperatures and increased wind generation.

In terms of market specifics, the TTF Front Month contract settled at €29.58, and the NBP Front Month at 71.54p. There were no unplanned outages, and storage levels stood at 64.08%. Looking ahead, near-term price levels are nearing psychological thresholds, indicating possible market reactions in an otherwise stable environment.