Energy Market Update - 26 April 2024

The UK energy market opened slightly tight today, influenced by short-term maintenance and fluctuating demand as temperatures return to normal levels.

The UK gas system started 10mcm/day short, though the market is slightly alleviated by stable total flows from Norway, which remain unchanged from yesterday despite ongoing maintenance at key facilities like Ormen Lange. However, this site is expected to resume operations tomorrow, potentially enhancing supply levels. Furthermore, two LNG cargoes are anticipated in the UK soon, with more scheduled for North West Europe, contributing to a robust import outlook. Current EU gas storage levels stand at 61.74%, ensuring a comfortable supply cushion.

On the trading floor, prices have shown a softening trend compared to yesterday's close. The May-24 Front Month contract is currently trading at 74.80p/th. This follows a bullish spell in the previous session, prompted by cooler temperatures which spiked local demand and subsequent supply constraints. With wind generation expected to increase over the weekend, a decrease in gas for power demand is anticipated, potentially stabilising the market further.

The geopolitical scene remains tense with risks from the Middle East still under watch after recent conflicts potentially influencing energy markets. However, no new developments have significantly shifted market sentiments today. Additionally, long-term temperature forecasts predict a return to seasonal norms, which may lead to a normalised demand pattern as we proceed into May.