Energy Market Update - 28 March 2024

The energy market is stabilising as we transition from winter to spring, highlighted by a shift to warmer weather forecasts and adjustments in front month and season contracts.

As we conclude March, the market adapts to the onset of spring, noting a warmer start to April than previously anticipated, lasting until a third into the month before reverting to seasonal norms. The TTF and NBP Front Month contracts have seen slight adjustments, with the TTF Front Month settling lower at €27, a decrease from the previous settlement. This comes alongside operational shifts, such as the unplanned outage at Kollsnes affecting gas flows and stable yet unremarkable LNG vessel arrivals in the UK.

In the backdrop of these developments, EU gas storage levels remain moderately full at 58.90%, reflecting a balanced supply outlook. However, the reduction in LNG arrivals to the UK, with only one vessel expected in the coming weeks, alongside operational disruptions like the Kollsnes outage, introduces a cautious note to the market's stability. Furthermore, the UK system's balance, influenced by resumed production capacities and a forecast for above-average temperatures and wind speeds, suggests a temporary easing in demand pressures.

Looking ahead, market dynamics are influenced by external factors such as extended outages in French nuclear power plants and the technical resilience of Ukrainian gas infrastructure amid ongoing conflicts. These elements, coupled with bearish fundamentals like lower demand and increased wind generation, are set to shape the market's trajectory as we step into April. Overall, the energy sector is navigating a complex landscape marked by evolving weather patterns, operational challenges, and geopolitical uncertainties, all playing a crucial role in the shaping of market trends.