Gas
May saw high injections into gas storage levels on the continent thanks to a stable supply line, with EU storage facilities just below the 70% level by the end of the month. If LNG deliveries are to continue at a high level in the coming weeks, this would allow further injections into gas storage. However, supply was impacted across the month due to planned and unplanned maintenance particularly on Norwegian gas flows. June will see further planned Norwegian maintenance and if this was to be extended or any unplanned maintenance was to occur, this will likely rally short-term pricing.
Recent good weather has seen temperatures remain above seasonal norms for a prolonged period of time. At present this weather is forecasted to continue over the upcoming weeks, which should further decrease gas demand and increase renewable generation. Although if temperatures were to increase further then there could potentially be an increase in demand to meet higher cooling requirements. Reports also suggest that it is likely we will see an El Nino weather front this winter which would be expected to result in a cold winter and dry, hot summer next year in Europe.
Electricity
May saw electricity and gas prices continue on a downward trajectory as strong fundamentals continue to put pressure on pricing. LNG cargoes remained strong to the UK and Europe as Asian demand remained low, allowing for high levels of LNG to find its way to European ports. If this was to change in the coming months and/or Asian demand was to intensify, then this would begin to support prices.
Recent good weather has seen temperatures remain above seasonal norms for a prolonged period of time. At present, this weather is forecasted to continue over the upcoming weeks, which should further decrease gas demand and increase renewable generation. Although if temperatures were to increase further then there could potentially be an increase in demand to meet higher cooling requirements. Reports also suggest that it is likely we will see an El Nino weather front this winter which would be expected to result in a cold winter and dry, hot summer next year in Europe.
May saw strong renewable generation which has reduced the requirement of gas for power demand during the month. Despite this wind generation yield over the period was inconsistent. The Britned interconnector (which transports power between the UK and the Netherlands) went offline on for a week last month for scheduled maintenance. France has announced they are planning to invest 100 million euros to train workers and boost innovation in civil nuclear projects over the next decade. This is part of their plans to try to reinvigorate the ailing sector.
Throughout May Oil markets were bearish with economic concerns, particularly in the US, that a global recession could materialize if financial markets collapse. Markets did rally following Saudi Arabia announcing a reduction of an additional 1 million barrels to commence in July. This is on the back of a recent OPEC meeting which saw them extend supply cuts of 3.7 million barrels per day running into 2024.
