May 2024 Energy Market BriefMarket Bounces on Supply Concerns

In April, mostly upward trends were observed across most tracked gas and power contracts, continuing the overall bullish wholesale pricing movements that have been observed since March. However, day-ahead power was the exception, recording a month-on-month loss.

Seasonal gas contracts from Winter 24 to Winter 26 were on average 8.6% higher in April when compared to the previous month. This was due in part to elevated levels of maintenance across the Norwegian Continental Shelf, limiting total gas flows to GB. Moreover, forward contracts recorded gains as higher Asian gas demand for storage restocking, ahead of the winter period, bolstered competition for LNG shipments across Europe.

Winter 25 was the premium gas contract, averaging 90.20p/th across the month. Across the month, we saw the day-ahead gas price rise 5.0% to average 71.71p/th. Likewise, front-month contracts were up 7.5% on average when compared to March, with May 24 seeing a 6.6% rise and June 24 recording an 8.4% rise to 71.67p/th and 71.17p/th, respectively. However, stronger gains were limited by high gas storage stocks across Europe, sitting at approximately 62.0% full at the time of writing, 3.4 percentage points above the levels seen last year according to data from Gas Infrastructure Europe.

Despite being heavily influenced by its gas counterpart, day-ahead power prices averaged £58.78/MWh across April, down 10.0% when compared to the prices observed last month. This loss can be attributed to higher levels of wind generation across April, acting to decrease gas demand and the requirement for more expensive fossil-fuelled emitters.

Likewise, day- ahead power was further influenced by a decrease to carbon prices across the UK. As a result, day-ahead power prices fell to the lowest level seen since July 2020 on 12 April at £26.50/MWh, and GB achieved a new low carbon intensity record of 19gCO2/kWh on the 15 April at 1pm – beating the previous record of 21gCO2/kWh achieved earlier in the month on 5 April. A bullish trend was recorded across contracts further out on the forward curve, with May 24 rising 2.6% to £61.96/MWh and June 24 growing 7.2% to £63.53MWh.

Likewise, seasonal power prices saw an upwards trend, increasing 6.0% on average – with Winter 25 the premium market, standing at £80.89MWh, up 7.0% when compared to March. Despite these upward movements, stronger gains were limited by the return of the Heysham 1 and Hartlepool nuclear reactors from maintenance at the beginning of the month, bolstering available power capacity across April as a whole.