Energy Market Update - 17 May 2024

UK power lifted on Thursday amid stronger UK carbon and NBP prices. The UK Front Month settled at £66.41/MWh. Confidence in Q3 French power supply margins continues to pressure neighbouring hubs, with France's hydropower and nuclear outlook leaving little room for bullish momentum in the UK.

European gas rebounded on Thursday after Wednesday's sell-off. Scheduled Norwegian maintenance is expected to pick up from 30 mcm/day to a peak of 90 mcm/day next week. Strong EU Carbon and robust Asian demand supported the TTF and highly correlated NBP hub.

Crude prices edged up on Thursday after data showed a stabilizing U.S. job market, fuelling expectations that the Federal Reserve could cut interest rates in autumn, boosting oil demand. US jobless claims fell to 222,000 last week, and CPI slowed in April, raising hopes for a September rate cut. Middle East conflict also added to bullish sentiment, with Israeli troops advancing into Northern Gaza and ceasefire negotiations at a standstill.

A bullish open in the NBP market this morning has the front month Jun-24 trading around 74.70p/therm. Scheduled Norwegian maintenance is set to take 170+mcm offline on 21 May. The UK expects three LNG vessels before the end of May as Asian imports step down from Q1 highs. European underwater energy pipelines face increased security due to the Russia-Ukraine conflict, with a recent drone strike causing a fire at a Russian oil refinery. The UK system opened 11mcm/day long, with low LDZ demand and elevated temperatures above SNT. Windspeeds are below seasonal norms, lifting DA UK gas for power demand. Two LNG tankers are inbound to UK shores within the next week.