UK Gas & Power: Lingering Outages, Weather Swings Drive Volatility Across European Energy

Head of Sales Trading, Jean-Philippe Marty, reports on energy market activity, covering the period 11^th June – 17^th June 2024. On our end-of-day pricing tool, The Source, we published an in-week high of £89.88/MWh for the Winter-24 seasonal power price on 13^th June. In this blog, JP shares the market news and updates from the last week. 

European gas prices were jolted higher on Tuesday as unplanned outages hit supply. The Visund gas field in Norway was reported down 15.4mcm/d while the Wheatstone LNG facility in Australia also suffered an unexpected outage. N2EX UK day-ahead power price cleared £14/MWh higher as wind generation was forecasted to drop overnight.

Both European gas and UK power rallied on Wednesday amid tightening market conditions and low renewable output. Increased cooling demand across Asia stoked competition for LNG cargoes, driving LNG prices to multi-month highs even as European storage levels remained healthy. UK wind output neared just 1GW, its weekly low, before expectations of a 12GW rebound on Thursday. The UK gas system was oversupplied despite reduced Norwegian flows, with July 2024 the most traded UK power contract.

European gas stayed firm on Thursday as the prolonged Wheatstone LNG outage will last three more weeks, compounded by the Visund issue dragging until June 23rd. Unseasonably cold weather across parts of Europe this week also lent price support. UK day-ahead baseload dropped £10/MWh on forecasts for much higher wind generation than Wednesday's depressed levels. The rest of the UK power curve tracked the upside in gas and carbon.

Weaker demand weighed on prices on Friday though Norwegian flows were higher into the UK's oversupplied gas system. The ongoing Wheatstone outage continued impacting Asian LNG buyers. A brief rally emerged on reports of shelling near the Russia-Ukraine gas transit point Sudzha, though no damage was confirmed. UK power curve trading was limited to just 106MW of seasonal contracts as wind was expected low through Monday, lifting day-ahead £5.07/MWh.

UK and European gas started this week lower as Norwegian supply returned to normal and European storage stood at a comfortable 73% full. The N2EX day-ahead cleared relatively unchanged as forecasts for lower wind generation offset a softer NBP day-ahead gas market.