Market Insight

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Mon, 13th May ’24


  • Last week finished on a bearish note, with Day-Ahead down by 4.5p/therm on the day (Fri vs Thurs).
  • Losses tracked European markets amid bearish pressure from summer levels of demand coupled with the scaling down of Norwegian maintenance over the coming days – likely resulting in higher flows to the UK/Europe (with flows now above the 5-day moving average).
  • Seasonal Forwards are lower than 1-month ago, but still at a significant premium versus 3-months ago (before Middle East tensions escalated/Freeport LNG went offline/EU sanctions of Russian LNG) – see chart.
  • Context-wise, Norway has gone a long way toward replacing big chunks of Russia’s historical gas flows, having provided 30% of Europe’s gas since Russia’s invasion of Ukraine (with more than 100 billion cubic meters of gas being exported in 2023).
  • At the time of writing, the supply/demand balance to the UK remains in better shape than our European counterparts – which has prompted our Day-Ahead value to improve its relative discount when measured against European benchmarks.
  • The UK’s marginally more favourable supply/demand dynamic reflects ample supply to support healthy storage injections and improved exports to the Continent.
  • If the spread between UK Day-Ahead and European Day-Ahead (TTF) persists, the price differential will facilitate interconnector (IUK) exports into Europe.
  • Wind forecasts have seen an upwards revision to start the week but expect a drop off in renewable generation towards the back end of the week.
  • We’re again seeing a decline in LNG sendouts at South Hook (back down to 8mcm/d where it was just a couple of weeks ago).
  • Temperatures above seasonal norms and historically high gas storage levels continue to reduce the UK’s LNG demand – with only 1 cargo degasifying in May so far (though 3 more are expected).
  • Market participants still have the jitters over news that the EU will be sanctioning Russian LNG (giving rise to worries over supply tightness).
  • Monthly Day-Ahead averages are on target this month to achieve 72p/therm (or circa. 2.45p/kwh).


  • Looking to the continent, near-term delivery prices are weighed by improving solar and wind outputs, and forecasts of higher French nuclear availability as the week progresses.
  • On the carbon markets, Friday’s trading seems to highlight the strong resistance around 75€/t for EUAs (European Allowances), with bullish momentum failing to break higher to the topside.
  • As such, we’re likely to see some downside this week due to the evident lack of sufficent fundamental support.
  • UKAs (UK Allowances) are trading at £37/tn (Dec-24 benchmark).
  • Our electricity generation mix is bearish in nature today with renewables contributing 40%, thermal at 21% (gas and coal) and low carbon at 23% (nuclear and imports).
  • Monthly Day-Ahead averages are on target this month to achieve £69/mwh (or 6.9p/kwh).
  • Monthly Day-Ahead averages for the month are now marginally higher than offers for Month-Ahead (June) at £65/mwh (or 6.5p/kwh) – perhaps reflecting a softer outlook as summer conditions start to take hold.



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