Energy Market Update - 08 March 2024

The UK energy market commenced slightly short today, balancing steady piped gas exports with an increase in LNG send-out and decreased MRS withdrawals.

Weather forecasts predict higher than normal wind speeds into the weekend, subsequently dropping below typical levels next week. Temperature expectations remain above seasonal norms for the coming ten days. The UK anticipates the arrival of one LNG cargo today, with another scheduled later this month, amid rising oil prices driven by increased demand from China and the extended outage at EDF's Chinon 3 reactor.

In yesterday's session, energy prices followed a downward trajectory, influenced by warmer weather projections until the end of March, before a dip below seasonal norms in April. This resulted in the TTF Front Month and NBP Front Month contracts settling lower, amidst stable Russian gas nominations and a slight decrease in EU gas storage levels, maintaining a complex supply outlook despite a steady forecast for LNG arrivals.

This morning, contract prices have shown minimal change, with key contracts indicating a cautious market response to mild weather forecasts, strong storage levels, and subdued demand. Oil markets draw support from a reduction in US stocks and the potential for Federal Reserve rate cuts, suggesting a nuanced market sentiment. For commercial clients, these conditions suggest a period of careful monitoring and strategic planning in their energy procurement and contract negotiations, considering the bearish fundamentals tempered by external economic factors.