Energy Market Update - 21 March 2024

The UK energy market begins to adjust as it anticipates shifting weather patterns and increasing wind speeds, leading to a decrease in gas for power demand. With the system opening 39mcm/day long and UK gas prices fluctuating, the market reflects a cautious but responsive stance to the changing energy dynamics.

Elevated temperatures and above-normal wind speeds are currently reducing gas for power demand, with the UK system initially opening significantly long. However, as temperatures are expected to decline, an increase in LDZ demand is forecasted, potentially tightening the market. Increased exports from Norway and LNG deliveries signal a well-supplied market, but the anticipation of cooler weather introduces a demand uncertainty that could influence price movements.

Gas prices opened lower but saw an uptick during early trading, influenced by the dynamic weather conditions and adjustments in demand. The presence of several LNG cargoes expected by mid-April alongside elevated wind speeds contributes to a complex balance of supply and demand. This complexity is further enriched by the uncertainty surrounding Freeport’s LNG trains' availability, introducing a bullish sentiment amidst an otherwise stable supply outlook.

Market fundamentals remain largely unchanged, with no unplanned outages. The stability in EU gas storage levels and the consistent flow of LNG cargoes suggest a market that is adapting to current conditions while remaining vigilant of potential shifts in weather, supply, and geopolitical factors. The fluctuations in key contracts, such as the TTF and NBP Front Month, reflect a market that, despite uncertainties, is finding a temporary equilibrium amidst a transitioning energy landscape.