Energy Market Update - 24 June 2024
The energy market is experiencing slight declines today due to warmer-than-expected temperatures reducing demand.
The NBP market has opened slightly lower than last week's close, with the Jul-24 contract trading at 79.50p/therm. The UK system remains long this morning as warmer temperatures, expected to last until Saturday, have reduced LDZ demand to 141.7mcm, significantly lower than the seasonal norm of 200mcm. Only one LNG vessel is scheduled to arrive in the UK before the end of June, amid increased competition for LNG driven by higher demand in Asia and an outage at Wheatstone in Australia.
Previous sessions saw spot contracts across European hubs and the NBP decline due to the recent uptick in Norwegian gas flows following maintenance. Despite unplanned outages at Visund, supply remained stable with low gas injections into large storage facilities, further pressuring spot prices. Pan-European storage conditions are robust, sitting above 75%. Asian prices maintain a premium due to ongoing heatwaves, limiting downside price movements.
Today’s session opened balanced, with UK temperatures much above seasonal averages and LDZ demand lower. Forecasts indicate temperatures will peak midweek before dropping, though remaining above seasonal averages. Wind generation is expected to fluctuate, with high output at the start and end of the week. Norwegian gas flows are stable at 323.5mcm/day, despite outages at Visund and Dvalin. The Hammerfest LNG plant in Norway, responsible for 5% of Norwegian gas exports, is expected to restart today following a power outage.
UK power prices continued their decline, following bearish trends in the NBP and EUA markets. The December ’24 UKA contract dropped by 2%, pulling the curve lower. The front month traded £0.73/MWh lower as the delivery period approaches. Brent oil prices eased by 1% on Friday, influenced by a strong US dollar and negative economic news, making USD-denominated commodities like oil more expensive for other currency holders.