Energy Market Update - 16 April 2024

The UK energy market opened the week with a supply excess of 15 mcm/day, influenced by reduced seasonal demand and stable geopolitical conditions, despite ongoing outages.

Despite today's oversupply, expected lower temperatures tomorrow will likely increase local distribution zone consumption, contrasting with a considerable drop in the overall demand forecast of 177 mcm/day, significantly below the seasonal norm of 251 mcm/day. This unexpected downturn has been partly offset by a recovery in gas inflows from Norway, despite the extended outage at Nyhamna. The UK's Medium Range Storage shifted from withdrawals to minor injections, indicating a slight ease in immediate supply pressures.

On the power front, reduced wind speeds later this week are anticipated to increase gas-for-power demand. Meanwhile, EDF's extended outage at Blayais 2 could tighten available nuclear capacity, further straining the energy system. Geopolitical tensions remain subdued with markets adopting a cautious stance awaiting developments from ongoing international conflicts.

In financial terms, gas and power contracts saw minor fluctuations, with key benchmarks like TTF and NBP showing slight increases. The market's resilience in the face of supply challenges and operational outages reflects a cautious optimism, though the upcoming weather conditions and geopolitical outcomes will play critical roles in shaping the market dynamics over the coming days.