Strong LNG output and imports heightened by an appreciating pound against the euro continued to support gas prices down throughout March. Supply remained reasonably high despite a number of outages at Norwegian gas fields increasing demand.
Worryingly, a deal is yet to be reached between Russia & Ukraine which remains a concern, adding upwards pressure to the gas market. More potential upside is coming from fears over Centrica’s Rough gas storage facility with a potential 30% capacity cut due to technical issues. However, the strong supply and lower oil prices due to the continued over supply has muted this impact.
The gas market continued to be the main driver behind the power market movement. The news that Rough gas storage might face capacity restrictions fed through to the power market and raised prices, however weak coal and oil prices reduced the impact.
At the beginning of the month milder temperatures and consistent wind speeds pushed up power production from renewables, pushed prices down. Mid-month saw cooler than forecasted temperatures increasing heating demand and the need for gas in power generation.
What to watch out for throughout April
In May we should hear more on the financial situation in Greece. They are currently locked in talks with creditors as they are running the risk of running out of cash and are seeking fresh financial aid.
An update on the Rough Gas Storage capacity problems is expected shortly.
Talks between Russia & Ukraine continue with the EU next month on the pricing of Russian Gas deliveries.