Energy Market Update - 15 March 2024

The UK energy market opens with a robust outlook as warmer than expected temperatures contribute to reduced demand and a surplus system. A slight uptick in UK gas prices echoes broader energy market movements, influenced by global events and supply dynamics.

The UK benefits from a warmer weather forecast, limiting Local Distribution Zone (LDZ) demand and promoting a long system with demand significantly below the seasonal norm. Despite a minor outage, strong UK Continental Shelf (UKCS) production and slightly increased Norwegian imports bolster supply. The market anticipates mixed windspeed forecasts, potentially impacting renewable generation, alongside a cautious LNG delivery schedule with a notable decrease compared to the previous year.

In the backdrop of a generally stable supply environment, notable market movements include an uplift in UK gas prices, buoyed by shifts in oil and carbon markets. International developments, such as increased LNG demand following an earthquake in Japan and tighter oil market forecasts by the International Energy Administration, introduce a layer of complexity to price trends. Despite these influences, gas storage levels remain commendable, hovering just below 60%, ensuring a degree of market confidence.

Looking ahead, the UK's energy landscape is marked by strategic considerations, such as the potential extension of Hartlepool's nuclear plant life, contributing to long-term supply security. The market's response, reflected in contract adjustments and price movements across gas, power, and oil sectors, underscores a cautiously optimistic stance amidst evolving global energy dynamics and domestic supply factors.