Early April saw gas prices continue on a bullish trend with cold weather anticipated in the UK and Europe and temperatures below seasonal norms.
Langeled flows were nominating at capacity at the beginning of the month and an increase in planned Norwegian maintenance saw supply margins tighten further.
Temperatures did dip below seasonal norms during the month but there was no noticeable increase in demand as high renewable generation alleviated any further upward pressure on prices. The end of the month saw EU Gas storage levels at 60%, which is a 50% increase on the 5-year average. Due to the current high storage levels, expectations remain that a level of 90% should be easily met by the 1st November.
Generally Norwegian gas flows remained strong across April, however there were interruptions as a result of maintenance and industrial action. The middle of the month saw an increase in planned Norwegian maintenance, with the Troll field and Kollsnes processing plant curbing available capacity. The UK responded by turning to storage withdrawals to meet the deficit. In addition to this there were also some short-term unplanned Norwegian outages which impacted supply. Continued industrial action was also seen in French facilities throughout April which had a significant impact on Nuclear & Hydro output across the country.
Significant amounts of LNG continued to arrive on the UK and North West Europe shores throughout April. With the Freeport LNG facility in Texas now fully operational this helped contribute to LNG inflows to Northwest Europe rising 14% higher than the 30-day average by the end of April. Shipping data also suggests a number of LNG carriers are expected to dock at UK Terminals by the middle of May.
Looking forward, if UK and European temperatures replicate last summer’s highs then it potentially could have a significant impact on LNG markets in the coming months. Reports suggest an El Nino weather front is possible and if this was to occur it would be expected to increase demand and increase competition for LNG cargoes across the globe. There is also an expectation that China will look to source additional LNG to meet demand, as economic activity increases following the removal of Covid restrictions at the end of 2022.
Oil prices have softened across April, amid economic concerns across Europe and the US and the spectrum of a potential global recession on the horizon. This was countered by OPEC initiating a notable reduction in production at the beginning of the month, although markets remained on a bearish trend.
