UK Gas & Power: Comfortable Fundamentals Settle Outage and Supply Concerns

VP Trading, Fanos Shiamishis, reports on energy market activity, covering the period 28th May – 3rd June 2024. On our end-of-day pricing tool, The Source, we published an in-week high of £93.88/MWh for the Winter-24 seasonal power price on 3rd June. In this blog, Fanos shares the market news and updates from the last week. 

Last Tuesday, European gas prices started the week lower as traders took profit from recent gains and forecasted temperatures remained above average for the next two weeks. UK power followed a similar trend, edging down in line with NBP and UKA markets. However, delays on Norwegian maintenance, a tighter LNG market and ongoing concerns on Austrian imports of Russian gas provided some upside support.

Throughout week, gas and power traded sideways, as fundamental factors indicated an improved supply picture, healthy renewable output and weaker demand across the UK and EU.  European storage inventories reached 69% full, higher than the five-year average of 56%, however, some caution remained over disrupted Russian pipeline flows to Austria and Asian LNG demand.

On Friday, front month contracts out to Winter-25 rallied early in the morning, only to sell off heavily in the afternoon, with more than 700MW of June-24 traded on the UK power market.  The week closed on strong supplies and no significant changes in demand.

This week, European gas started strong with front month TTF reaching a 6-month high due to a significant unplanned outage at the Norwegian Nyhamna gas processing plant, reducing the flow to the continent by 80mcm/d. Although the duration of the outage remains uncertain, the market retraced quickly as long-term fundamentals remain comfortable. UK Power followed the sharp up move, with front month, quarter and season contracts the most impacted.