MAKE CHANGE POSSIBLE.

We understand the business energy market can be challenging.

Our specialists compile a Market Drivers report each month.

We have highlighted Bearish drivers, expected to contribute to the market lowering, and Bullish drivers, expected to contribute to the market going higher.

Click here to discuss your business energy challenges.

Bearish Drivers

– North West Europe storages are forecast to end May at 356 TWh, 53 TWh short of the record high seen in 2020, significantly above the five year average

– Global LNG demand remains robust and there are no planned outages next month. Asian demand remains muted and the three German FSRUs in commercial operations are forecast to ramp up by 18 mcm/d MOM, further bolstering NWE supply

– Speculation that European storages could be filled as early as September compared with the targeted November

– Demand destruction in industrial and gas for power sectors to stay strong

Bullish Drivers

– May is a maintenance heavy month on the Norwegian continental shelf, any extensions to the planned works or further capacity cuts due to unplanned outages resents a risk to our forecast

– Lower than forecast generation from the much maligned French nuclear sector, we expect capacity cuts to be higher than current UMM’s for May

– We expect higher gas for power demand across NWE next month assuming normalised wind speeds

– Removal of German nuclear for the power mix is potentially a bullish driver for next month the first full month without the nuclear power generation in the country

– Maintenance at LNG terminal at Montoir, Fos Cavauo, and Zeebrugge

April saw large falls in both the TTF and NBP markets with stable fundamentals and loose supply/demand dominating markets. After a slightly bullish start to the month, all contracted edged lower with prices in the UK trading around the levels last seen in July 2021. There is also support from a technical standpoint at these levels, once we see a sustained break in these prices it should open the door to further weakness. The main drivers for the month were strike action on French LNG terminals which as of writing, have now ended.

Looking forward to the reminder of May and into the summer months, it is expected that European gas injections are to slow down as we head into maintenance season, namely, at the LNG facilities in Montoir, Fos Cavaou, and Zeebrugge Additionally, heavy Norwegian maintenance over the next couple of months will also keep injections limited.

Having said this, demand destruction is expected to continue. In may it is expected that industrial demand is to be 15% lower compared to the previous 5 years, down from the 19% difference seen in March 23.

Another potential bullish driver for gas demand is the German shutdown of its last three nuclear power plants (4 TW) on April 15th. Recently strong wind and solar output in the country has offset the missing power generation with no visible impact on gas for power consumption yet. However, with no nuclear generation capacity in the power mix, gas could be the go to fuel to balance the system when renewables are weak.

Also, this summer will also be the first with much more new LNG capacity in NWE (Wilhelmshaven, Lubmin, Brunsbuttel), which, like last year, is expected to allow a lot of overseas gas to pour into the Continent helping replenish local stocks.

Given the above points, the market is likely to continue to trade stably throughout summer as demand destruction coupled with stable LNG seeing prices trade in line comfortably.