Energy Market Update - 09 May 2024

Oil prices increased after U.S. oil storage data revealed a larger-than-expected decline in crude stockpiles. In contrast, European benchmarks softened due to an upward revision in temperatures, leading to a more comfortable supply outlook.

U.S. crude inventories fell by 1.4 million barrels, surprising analysts who anticipated a rise. This has sparked optimism in oil markets, reflected in Brent oil climbing to $84. In European gas markets, the NBP front month dropped slightly to 74.85p/therm, influenced by the warmer temperatures in the UK, which have led to reduced LDZ gas demand. With good nuclear generation and higher solar output expected, the UK energy system remains well-supplied.

UK power prices also trended lower, with the Front Month Baseload contract at £66, influenced by strong nuclear and solar generation. Gas for power demand remains elevated due to lower wind levels. Meanwhile, LNG dynamics are shifting as Asian buyers reduce imports, potentially affecting European markets. The UK expects four LNG vessels by the end of the month, maintaining supply balance.

In broader European markets, the TTF Front Month settled at €31, remaining stable from the previous session. The NBP market opened with the Jun-24 contract at 75.60p/therm. Overall, the market landscape is marked by a blend of stable supply and moderated demand as spring progresses, with notable influences from oil price trends and temperature forecasts.