Chris Hurcombe’s Post

This morning 14th October, the UK energy system started the week short by 19 million cubic meters, underscoring market tightness. Gas prices eased slightly, with the NBP Day-Ahead contract settling at 96.40 p/therm, down from Friday. However, volatility remains a factor as global markets continue to react to geopolitical tensions in the Middle East. Norwegian flows to the UK are stable at 77.5 mcm/day, though a small unplanned outage at Oseberg is curtailing 12 mcm/day, with full capacity expected to resume tomorrow. LNG sendout has increased to 38 mcm/day, with Milford Haven preparing to receive a shipment tomorrow, marking the first of three cargoes expected in the coming weeks. Demand for gas-fired power is expected to decline as wind generation picks up throughout the week, thanks to improving wind speeds. Forecasts predict warmer-than-usual temperatures, peaking above seasonal norms by midweek and likely staying mild until the end of October. Storage injections continue across Europe, with total reserves now 94.93% full, although intermittent withdrawals are being made to meet higher spot demand in some regions. The UK power market saw day-ahead baseload prices soften to 76.08 £/MWh, reflecting the downward trend in gas prices. Peak power prices dropped even more sharply, settling at 77.32 £/MWh, down from Friday’s levels. Renewables are expected to play a larger role this week, easing pressure on gas-fired generators. Brent crude prices remain steady, with the front-month contract at 79.04 $/bbl, as market participants monitor developments in the Middle East. Carbon prices also saw minimal movement, with EUA Dec-24 trading at 64.62 €/tonne and UK ETS Dec-24 at 37.55 £/tonne. Currency markets showed little change, with GBP/EUR at 1.1947 and GBP/USD at 1.3066. With several LNG arrivals on the horizon and wind generation set to increase, the market may experience some easing in supply concerns as we move through the week. Nonetheless, the potential for disruptions, especially from global geopolitical events, remains a key factor to watch.

As of 8th October 2024, the UK energy markets have started the day with notable fluctuations in both gas and power prices, driven by supply constraints and shifting weather conditions. In the gas market, the NBP Day-Ahead price climbed to 100.00 p/therm, reflecting a 2.20 p/therm increase from the previous session. This rise comes amid reduced gas flows from Norway due to ongoing unplanned maintenance at the Asgard field and an extended outage at Troll, impacting total exit flows. Despite this, exports from Norway to the UK via the Langeled pipeline have increased, supporting the UK system, which opened 8 mcm/day long this morning. LNG send-out has decreased to 11 mcm/day, with three new cargoes expected to arrive in the UK over the next three weeks. UK storage injections continue, and pan-European storage remains robust at 94.56%, though minor withdrawals are being observed in some countries. On the power side, the UK Day-Ahead baseload price rose to £89.09/MWh, up by £12.85/MWh compared to the previous session, while the peak load price surged to £94.14/MWh. This price spike is largely due to expected cooler temperatures from tomorrow, which will drive up heating demand through the middle of the month. Wind output remains strong and is forecasted to stay above seasonal norms for the next two days before stabilising at average levels. Nuclear outages continue to play a significant role, with several key plants still offline or under maintenance, further tightening supply. Looking at other energy commodities, Brent crude oil is trading at $80.93/bbl, a $2.88 increase from the previous settlement, driven by a combination of OPEC+ cuts and ongoing geopolitical risks. Coal prices for ARA CIF Cal Y+1 settled at $127.25/tonne, slightly down by $0.54/tonne. In the carbon market, the EU ETS Dec-24 contract fell to €61.76/tonne, the lowest level in six months, while the UK ETS Dec-24 contract dropped to £35.29/tonne. These declines come amid lower industrial activity and cooler weather across the continent. In currency markets, the GBP/EUR exchange rate dipped slightly to 1.1916, while GBP/USD fell to 1.3083, reflecting ongoing global economic uncertainties. As colder weather sets in and supply challenges persist, the UK energy markets are likely to remain volatile. Keep an eye on gas imports, LNG arrivals, and nuclear availability, as these will be key factors influencing prices in the coming days.

6th December 2024, Daily UK #Energy Market Overview - This morning, the UK energy market faces a challenging landscape with the system opening 9 mcm/day undersupplied. #Gas prices show a slight decline, with NBP Day-Ahead settling at 114.50 p/therm. Meanwhile, UK Power Day-Ahead Base dropped significantly to £77.75/MWh, down by £15.73, reflecting bearish conditions across the board. Colder weather looms as temperatures are forecast to dip below seasonal norms from this weekend, increasing heating demand and pressure on energy systems. While #LNG send-outs remain steady, Norwegian exports are ramping up, mitigating some supply concerns despite additional planned maintenance at Sleipner and Gullfaks. UK gas demand surged to 248.77 mcm, driven by robust LDZ requirements. Wind generation is forecast to weaken next week, further tightening gas-for-#power needs. Power prices softened significantly due to strong wind generation earlier in the week and declining European gas storage levels, now at 84%, marking a 3% week-on-week drop. The geopolitical landscape adds complexity, with President Putin's decree easing payment methods for gas exports to counter sanctions against Gazprombank. Market reactions remain muted but watchful as these changes could influence European and UK energy curves further. On the global front, Brent crude is stable at $72.09/bbl, while coal prices fell to $115.54/tonne. Carbon trading saw minor dips, with EUA Dec 24 at €67.34/tonne and UK ETS Dec 24 at £36.17/tonne, reflecting subdued industrial activity. Currency movements show a slight strengthening of the pound, with GBP/EUR at 1.2077 and GBP/USD at 1.2758. This offers mild relief for import-heavy energy trades but remains sensitive to broader macroeconomic conditions. As colder weather and supply challenges converge, market participants must stay vigilant, especially with LNG arrivals scheduled to bolster supplies. The evolving dynamics of European storage, renewables output, and geopolitical influences will continue shaping the market trajectory.

#Daily #Energy Report - 22nd November: Today’s UK energy market dynamics reflect a multifaceted picture shaped by colder weather, shifting energy flows, and geopolitical tensions. #Gas and #power prices saw mixed movements, while supply and demand interplay continues to evolve as we move towards the weekend. The NBP Day-Ahead price settled at 121.50 p/therm, up from 117.10 p/therm on 21st November. This increase comes amid a colder spell and notable storage withdrawals across Europe. The UK system opened the day oversupplied by 13 mcm/day, largely due to increased Norwegian imports following an outage at the Kårstø processing facility. Norwegian flows to the UK increased by 9 mcm/day, offsetting the colder weather-driven demand. LNG continues to play a crucial role in balancing the market, with several cargoes expected to arrive at UK shores in the coming weeks. The UK’s positioning as a premium market remains evident, attracting shipments amidst broader European competition. Day-Ahead power prices saw a slight uptick, with the baseload price closing at £104.80/MWh. Meanwhile, the peak price settled at £112.94/MWh. Nuclear outages are adding stress to the power system, with Sizewell B2 offline and additional facilities set to go offline soon. This is compounded by the intermittency of wind generation, which will be critical to monitor as wind speeds are expected to strengthen into the weekend and early next week. Despite the challenges, forecasts suggest temperatures will rise significantly this weekend, up to six degrees above seasonal norms, providing some relief to heating-related power demand. Brent crude remains relatively stable at $74.23/bbl, and the carbon market shows EUA prices at €69.99/tonne, signaling sustained pressure on decarbonisation costs. In currency markets, GBP/EUR is steady at 1.2009, while GBP/USD saw a slight dip to 1.2586, reflecting broader forex trends. The Russia-Ukraine conflict continues to influence market sentiment. Recent escalations and Western sanctions, including on Gazprombank, are reshaping trade and energy flows. This geopolitical backdrop underscores the market’s vulnerability to external shocks as we enter the colder months. Key focus areas include the resolution of the Kårstø outage, the performance of UK wind generation, and the trajectory of LNG imports. With temperatures normalising after the weekend, market participants will closely watch storage levels and inter-regional competition for energy supplies, particularly with Asia. Today’s report reflects a dynamic landscape where adaptability is key, underscoring the importance of robust strategies in navigating the energy market's complexities.

As of 7th October 2024, the UK energy market has opened with notable shifts in gas and power prices, reflecting both geopolitical uncertainty and supply-demand dynamics. UK natural gas prices rose slightly, with the NBP Day-Ahead contract settling at 97.80 pence per therm, a 2 pence increase from the previous session. This upward movement is partially attributed to ongoing unplanned maintenance at Norway's Troll gas field, as well as planned maintenance at other facilities. Total exit nominations have now reached over 300 million cubic meters per day, but despite bullish factors like strong Medium Range Storage injections and increased gas demand for power, market fundamentals remain largely bearish. Norwegian imports to the UK are flowing at 58 million cubic meters per day, while temperatures are forecasted to drop below seasonal averages starting 9th October, which could shift demand in the coming days. UK power prices have also experienced some volatility, with the Day-Ahead baseload price falling to £76.24 per MWh, a decrease of over £7 compared to the previous session. However, forward contracts, particularly for Q1-25, saw increases as prices for Nov-24, Dec-24, and Jan-25 edged up. The gas market’s influence, coupled with geopolitical tensions, continues to play a key role in shaping short-term price movements. Wind speeds are expected to remain above seasonal averages, except for the weekend, which could alleviate some of the pressure on power prices. On the global stage, Brent crude oil saw a modest increase, reaching $78.05 per barrel, reflecting market reactions to heightened geopolitical risks in the Middle East and Ukraine. Coal prices for delivery in 2025 also surged to $127.79 per tonne, a sharp rise of nearly $5 as uncertainties in global supply chains persist. Meanwhile, EU carbon prices have dropped to a six-month low, standing at €62.05 per tonne, amid strong renewable energy output, reduced liquefied natural gas consumption, and macroeconomic concerns. Currency fluctuations have remained relatively stable, with the GBP/EUR exchange rate moving slightly to 1.1942 and GBP/USD holding steady at 1.3116. Looking ahead, the UK system remains 30 million cubic meters per day short as we start the week, with three LNG cargoes expected by 18th October. Windspeeds and temperatures are forecasted to fluctuate, potentially impacting both gas and power markets. The geopolitical landscape, particularly in the Middle East, remains a significant factor to watch, with the potential to drive further market volatility in the weeks ahead.

𝐃𝐚𝐢𝐥𝐲 𝐌𝐚𝐫𝐤𝐞𝐭 𝐒𝐮𝐦𝐦𝐚𝐫𝐲 - 𝟏𝟎/𝟎𝟕/𝟐𝟎𝟐𝟒 𝐌𝐨𝐧𝐭𝐡-𝐚𝐡𝐞𝐚𝐝 𝐆𝐚𝐬 𝐏𝐫𝐢𝐜𝐞𝐬 𝐈𝐧𝐟𝐥𝐮𝐞𝐧𝐜𝐞𝐝 𝐛𝐲 𝐄𝐮𝐫𝐨𝐩𝐞𝐚𝐧 𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐢𝐞𝐬 Month-ahead gas fell 2.9% yesterday before rising 0.74% this morning to 73.33p/th. As we transition through summer, the market appears to be benefitting from high European inventory levels, high renewable generation levels, and a falling risk premium associated with the reducing supply security concerns as the potential for easing geopolitical tensions increases marginally. However, Japanese LNG storages for power have fallen below 2 million tonnes for the first time since April, and prior years' estimates indicate that these inventories could fall further depending on the weather. A hotter summer, similar to last year, could drive inventory levels lower and JKM LNG month-ahead prices higher. That would put the UK and EU in competition with Asian markets for LNG and apply bullish pressure to UK gas contracts across the near-curve. 𝐄𝐥𝐞𝐜𝐭𝐫𝐢𝐜𝐢𝐭𝐲 𝐏𝐫𝐢𝐜𝐞𝐬: 𝐈𝐦𝐩𝐚𝐜𝐭 𝐨𝐟 𝐖𝐢𝐧𝐝 𝐆𝐞𝐧𝐞𝐫𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐏𝐨𝐥𝐢𝐜𝐲 𝐂𝐡𝐚𝐧𝐠𝐞𝐬 Wind generation is predicted to peak at 10.3 GW at 14:00 hours this afternoon, then dip after midnight to 4.2 GW at 16:00 hours tomorrow. The decrease in wind generation relative to today is projected to put upward pressure on day-ahead baseload electricity prices. Expect day-ahead prices to rise from yesterday's £66/MWh and to continue that trajectory until the end of this week. Meanwhile, baseload electricity prices for the month ahead (Aug 24) fell by 3.21 % to   £64.85/MWh. Further along the curve, baseload electricity contracts fell but by a smaller percentage. This also coincides with the new government's proactive approach to renewable generating development, as they intend to lift the ban on onshore wind farms which has the potential to apply notable bearish pressure to further dated seasonal gas and power contracts. 𝐅𝐄𝐃 𝐃𝐞𝐜𝐢𝐬𝐢𝐨𝐧𝐬 𝐚𝐧𝐝 𝐏𝐨𝐥𝐢𝐭𝐢𝐜𝐚𝐥 𝐒𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐁𝐨𝐨𝐬𝐭 𝐆𝐁𝐏 The markets had long awaited FED rate decreases, which did not occur in the first half of 2024. There is a greater possibility of a 0.25% rate drop at the September meeting. Following the resounding Labour victory, which ensured political stability in the UK, the pound to dollar is up and hanging around 1.28. Aggressive FED rate cuts relative to the BoE can further boost the GBP in tandem with a weakening dollar, putting the UK in a better position to make global oil and gas purchases at a relative discount to when the UK currency is weaker. Smarta Energy #EnergyPrices #GasMarket #RenewableEnergy #LNG #GBP

Today, the UK energy market showed mixed activity amid ongoing geopolitical uncertainties. Front-month UK Power rose by 2.27%, closing at £81.46, while front-month NBP Gas climbed 1.28% to 95.40p. Carbon markets were stable, with Dec24 EUA's flat at €71.87, and UKA's up 4.61% at £40.60. Brent crude also saw gains, finishing at $81.15, up 1.74%. Stay informed and prepare for potential market shifts as geopolitical factors continue to influence energy prices. #EnergyMarket #UKPower #NaturalGas #CarbonTrading #BrentCrude

„…UK households are at risk of an “inflationary sting” if the natural gas market tightens as traders rush to replace stockpiles before winter, according to energy consultant LCP Delta. Europe is increasingly reliant on global supplies to replenish its inventories, but liquefied natural gas shipments are being diverted to Asia where they can fetch high prices. Geopolitical factors are also adding to concerns. There are “‘worrying signs that higher energy costs could rebound this autumn,” said Sam Hollister, the firm’s head of economics, policy and investment, in a report. Wars in Ukraine and the Middle East are contributing to “fervour among traders of a possible tightening of supply later this year as the heating season nears.” Britain wrestled with rising energy costs even before Russia’s invasion of Ukraine in 2022 sent gas prices soaring and kicked off a region-wide crisis. The UK doesn’t have significant gas storage, and it relies on Europe’s infrastructure to complement its energy needs. A cold winter means higher consumption of gas for heating, which could raise prices on both sides of the English Channel. For now, UK gas futures are slightly below their historical average, and energy bills across the country are actually set to drop in early July. Energy consultant Cornwall Insight Ltd. expects bills to increase slightly in October, when the UK’s energy price cap is updated, coinciding with higher winter demand. Europe’s storage facilities are currently 73% full, higher than usual for the time of year. Still, unexpected outages, heat waves and uncertainty over the remaining pipeline flows from Russia are reminders of supply risks. The next two months will be crucial, according to LCP Delta’s Hollister. “If storage levels aren’t replenished now, we could see a dash for gas later this year, as we hit prime heating season,” he said. “This could result in an even bigger leap in the January energy price cap.”

November 1st, 2024: UK energy markets opened with gas and power prices easing amid mild weather and stable Norwegian gas flows. The UK’s NBP day-ahead gas price settled at 99.43 pence per therm, slipping nearly 1.4% on the day due to steady flows from Norway at 337.8 mcm/day and a lack of fresh geopolitical developments, especially from the Middle East, which have previously spurred volatility. Maintenance at Gullfaks and St. Fergus is expected to wrap up on November 11th and November 22nd, respectively, which should maintain current flow levels into the month. In power markets, day-ahead baseload prices settled at £90.10/MWh, following the bearish sentiment in gas prices. Despite weak wind generation forecasts, the drop in gas prices provided some relief to power. Additionally, government confirmation that the UK’s Carbon Border Adjustment Mechanism (CBAM) will go into effect a year after the EU’s own CBAM implementation suggests continued alignment in carbon measures, even as the specifics are yet to fully unfold. Looking at today’s session, the UK system opened balanced, thanks to stable UK Continental Shelf receipts and Norwegian flows. However, with temperatures expected to dip early next week, demand may see slight upticks. Wind speeds are forecast to remain well below seasonal averages until mid-next week, moderating demand for gas-fired generation to meet electricity needs. LNG supply also remains strong, with two cargoes expected in the UK by November 6th and multiple shipments scheduled to Northwest Europe. France’s nuclear output continues its notable recovery, with annual production on track to reach 355 TWh. This increased supply is not only boosting France’s domestic grid stability but also providing additional export capacity to neighboring countries, offering potential relief to Europe’s winter supply dynamics. On the global front, markets are keeping an eye on a potential Azeri gas swap deal, which could help Europe offset declines as the Ukraine transit agreement nears its expiration at year-end. In carbon markets, EU Allowance (EUA) prices are at €64.58/tonne, while UK ETS prices stand at £37.89/tonne, a modest increase that reflects continued policy and market adjustments. Currency movements today see GBP/EUR at 1.1940, a slight decrease from yesterday, while GBP/USD is at 1.2898. These shifts mirror continued uncertainty in global financial markets, with energy prices remaining reactive to currency and commodity fluctuations. As the UK’s winter energy demand builds, close monitoring of market supply conditions and geopolitical impacts remains crucial.

In this article, Kenneth Rogoff, Harvard professor and former IMF chief economist, highlighted the dramatic volatility in oil and gas prices triggered by the pandemic, describing it as the "mother of all shocks." This volatility continues to cause fluctuations in energy prices years after 2020, impacting businesses and consumers. Looking ahead, Rogoff predicts sustained high prices and market disruptions unless investment in energy production significantly increases. #OilandGas #OilIndustry