Energy Market Update - 24 April 2024

The NBP market has shown a slight recovery from yesterday's close, driven by some supply constraints. The NBP Front Month May-24 contract is trading at around 73.10p/therm, influenced by reduced Langeled flows due to planned maintenance and cooler UK temperatures.

Supply tightness is highlighted by the decrease in Langeled flows from near capacity at 70mcm to 51.6mcm, attributed to ongoing maintenance activities. This reduction coincides with cooler temperatures in the UK, approximately 2-3 degrees below the typical levels for April, contributing to a premium in the Day Ahead (DA) contract over the Front Month (FM) for UK Baseload prices. Wind generation is currently below normal, further supporting higher DA prices.

The UK's energy system is approaching a balanced state today, slightly oversupplied by 6 mcm/day, with a modest rise in Local Distribution Zone (LDZ) demand. This adjustment follows lower than normal demand earlier in the week. The Hammerfest LNG facility in Norway, a significant European LNG production site, remains offline due to a recent gas leak, with potential implications for future production timelines and market impacts. The facility's offline status and upcoming LNG send-out reductions are offset by increased withdrawals from Medium Range Storage (MRS), aiming to match the heightened demand due to the cold.

Looking ahead, temperatures are expected to rise towards seasonal norms towards the end of April. The market anticipates the arrival of two LNG cargoes in the UK within the first week of May. Internationally, Egypt's decision to halt LNG exports starting May to address its domestic summer demand could influence European energy prices, a development that market watchers are closely monitoring.