Energy Market Update - 05 April 2024

The energy market exhibited a rebound, with indicators such as Brent Crude crossing the $90 mark for the first time in six months amid Middle East tensions.

Brent Crude's leap into the $90 range underlines the market's reactive nature to geopolitical tensions in the Middle East. Concurrently, the TTF and NBP Front Month contracts observed slight increments, with the TTF Front Month contract closing at €27, a rise attributed to factors like the unplanned Gullfaks outage and consistent Russian gas nominations. Despite these disturbances, the EU's gas storage remains relatively stable at 59.44% capacity, hinting at a sustained supply security amidst fluctuating demand predictions influenced by the upcoming warmer weather.

The market's buoyancy is further demonstrated by the uptick in UK gas and power prices, with the NBP spot price adjusting to 65p from 63p, and UK Power Day Ahead moving to £42 from £61. The stability in the Front Month and Front Season contracts across both gas and power sectors indicates a market recalibrating to the immediate supply-demand dynamics, underscored by the anticipation of above-seasonal temperature norms which could influence demand patterns until mid-May.

Brent Oil's ascent to $91, alongside increases in the TTF equivalent and EU Allowances, reflects broader energy sector trends, including heightened oil prices due to ongoing geopolitical conflicts and OPEC+'s decision to maintain production cuts. This overall market sentiment, characterised by cautious optimism amidst variable geopolitical and environmental factors, suggests a complex but gradually stabilising energy landscape as the market heads into the second quarter of 2024.