UK Gas & Power: Impact of Norwegian Outages and US LNG Disruptions (16th - 22nd July)

VP Trading, Fanos Shiamishis, reports on energy market activity, covering the period 16^th July – 22^nd July 2024. On our end-of-day pricing tool, The Source, we published an in-week high of £84.85/MWh for the Winter-24 seasonal power price on 16^th July. In this blog, Fanos shares the market news and updates from the last week.

European gas prices rebounded on 16^th July, driven by unplanned Norwegian outage extensions, potentially impacting flows to the UK and the continent. With EU gas storage at 81%, the power market followed suit, though liquidity was low, with only 150 MW traded on the seasons. The N2EX day-ahead base cleared £7/MWh higher due to a stronger NBP day-ahead market and anticipated lower wind generation.

On 17^th July, minimal changes in the weather outlook provided little price direction. Cooler temperatures in Western Europe and heatwave warnings in the south created near-term uncertainty. The market saw losses likely driven by financial speculators, with power following the gas selloff. Renewable generation output uncertainty for the next two weeks might add value to power, despite gas being well supplied and European demand at historic lows.

Thursday saw a gas-led rally initiated after US markets opened. Reports from Freeport LNG about canceling at least 10 cargoes due to Hurricane Beryl impacted both European and Asian traders, notably affecting TTF and NBP prices.

The market indicated a flat to weaker price outlook by the end of the week, exacerbated by IT disruptions following a Microsoft cybersecurity update from CrowdStrike. This particularly affected the UK brokered market, with several brokers unable to process trades. Despite strong bid interest, softer gas prices kept power offer prices below the previous day's close. The UK gas system was oversupplied by 9mcm, with demand expectations remaining flat. Norwegian supply increased slightly, and Gassco's update about Skarv maintenance from August 29th posed risks to September supplies.

Yesterday saw a partial recovery in the market, driven by resumed exports at Freeport LNG facilities. Limited demand in Asia contributed to this trend, maintaining overall healthy stock levels. The UK gas system was marginally long in the morning. Wind output declined, expected to reach its lowest point on Wednesday night but anticipated to rebound quickly to its highest level early on Thursday.