Energy Market Update - 22 April 2024

This morning, the UK energy market experiences a notable surplus in gas supply, with a 20 mcm/day excess attributed to maintenance rerouting and enhanced pipeline flows, setting a stable tone despite slight shifts in demand due to colder temperatures.

Increased gas flows via the Langeled pipeline, reaching nameplate capacity, and higher outputs from Vesterled contribute to the current surplus. Conversely, LNG sendout is reduced, yet supported by Medium Range Storage withdrawals at 42 mcm/day. The UK’s gas supply is further bolstered by the anticipation of three LNG cargoes in the near term, despite a downtick in UK windspeeds potentially increasing gas burn demands on less windy days. Additionally, developments in Denmark’s wind capacity project signal future renewable energy expansions.

Gas prices have cooled slightly after recent volatility, with the NBP Front Month May-24 contract trading at 75.90p/therm. Market equilibrium is maintained by stable European Union gas storage levels, reported at 62.06% full, and steady flows from Russia, although Nord Stream remains offline. Short-term temperature forecasts predict cooler than average conditions persisting until late April, influencing slight increases in heating demand.

Geopolitical tensions in the Middle East also play a critical role, with recent developments between Israel and Iran calming, yet remaining a significant factor in broader market sentiment. This context, combined with consistent operational status and a stable outlook for incoming LNG supplies, shapes a complex but manageable market environment as we transition towards May.