Energy Market Update - 01 May 2024

The energy market experienced varied movements with crude prices dropping amid increasing U.S. production, while UK power prices rose. European gas markets remained cautious ahead of Norwegian maintenance, despite comfortable storage levels.

Crude oil closed lower, marking the third consecutive session of declines due to increased U.S. production, which reached 13.15 million bpd in February, and a significant build in crude inventories. In contrast, UK power prices showed an increase with the June 24 baseload contract gaining £2.3/MWh, influenced by a downward revision in wind power production estimates and slightly higher temperatures boosting demand expectations. European gas prices saw cautious optimism with the NBP Front Month price recovering from Monday's losses, despite upcoming Norwegian maintenance which is expected to reduce gas flows significantly.

The market dynamics also reflected ongoing geopolitical tensions and discussions at the G7 about reducing European dependency on Russian LNG. With the approach of warmer weather in May, the market anticipates a potential shift in demand patterns. The EU gas storage levels at 62.10% also contribute to a stable supply outlook. Furthermore, the UK and Europe are expecting several LNG deliveries in the coming weeks, which could further influence gas prices and availability.

On the contracts front, the TTF and NBP Front Month contracts saw slight increases, with the TTF settling at €29 and the NBP at 72p. UK power prices also indicated an upward trend with the Front Month Baseload contract priced at £62. Overall, the energy market presents a complex landscape with various factors influencing price movements and supply dynamics as we move into May.