Energy Market Update - 29 April 2024

The energy market showcased a bearish trend as warmer weather and increased wind generation led to decreased demand across the UK and Europe.

In the oil sector, concerns over geopolitical tensions in Gaza supported crude prices, with the U.S. onshore oil rig count dropping slightly to 506. Conversely, the gas market witnessed a decline in prices with the NBP gas trading lower due to an improved supply and reduced demand scenario. Notably, Norwegian gas flows to Europe increased significantly, contributing to the softening of prices. The UK and Europe’s mild weather further lessened the need for heating, easing the demand pressure on gas storages which are currently 61.7% full.

The UK power market responded to the shift in weather and energy dynamics, with prices closing lower due to robust wind generation and weaker demand. The upcoming week sees a continued trend of lower demand, influenced by above-seasonal temperatures and strong wind output. Despite the commencement of Norwegian maintenance impacting some gas supply routes, the overall supply framework remains stable with the anticipation of LNG arrivals and the resumption of Norwegian facilities by mid-May.

The market remains watchful with key gas contracts showing a downtrend as the TTF Front Month settled at €28.87, a drop from the previous €29.77. The forward-looking sentiment is cautious yet stable, with the market adjusting to the upcoming maintenance schedules and the expected weather conditions. Energy traders will likely monitor the returning capacity and the potential impacts of the weather on consumption patterns as we move further into spring.