Energy Market Update - 03 May 2024

The UK system is oversupplied, but upcoming maintenances on the Norwegian Continental Shelf could challenge this stability. Despite decreasing geopolitical tensions impacting crude prices, attention shifts to the upcoming OPEC meeting and potential monetary policy adjustments.

This morning, the UK gas system began with a slight oversupply, aiding in market stability. However, upcoming maintenances on key Norwegian fields signal potential supply tightness. This includes reductions at the Karsto processing plant and the Dvalin and Visund fields, scheduled to start impacting flow from May 4 onwards. These developments are juxtaposed against stable medium range storage withdrawals and unchanged nominations from the Rough storage facility.

Yesterday, energy prices saw an uptick across Europe, driven largely by demand in EUA Carbon, despite steady fundamental supply factors. The UK saw the TTF Front Month contract rise to €31, reflecting this heightened activity. Similarly, in the power sector, UK Front Month Baseload and Season contracts also observed increases. In contrast, Brent crude and other traditional commodities remained less volatile, with slight adjustments observed.

Looking forward, the supply outlook remains generally positive, bolstered by strong renewable outputs and robust EU gas storage levels. Norwegian maintenance is anticipated to be less disruptive than in the previous year, suggesting a comfortable progression towards filling storage ahead of the winter months. This stability in supply is critical as it offsets potential volatilities in market prices, particularly for near-term LNG imports that lack long-term contract security.