Wholesale energy market update: There and back again

Wholesale energy markets over the first quarter of 2024 continued their downward trajectory, as fears of a cold winter subsided, UK and European gas storage facilities remained well stocked, and LNG cargos continued to arrive in Europe (1 & 2).

As the year has progressed, however, we have seen Ukraine attack Russian oil refineries, Russia strike Ukrainian gas storage facilities, a variety gas of supply outages across Europe, and increased demand for LNG in Asia.



Despite bumper storage levels UK and European energy markets are pricing-in significant risk premiums for the season’s ahead, as uncertainty in the medium-term global commodity markets, and geo-political situation prevail.

LNG supply constrained in Europe

The LNG market plays an important role in setting the marginal price of Natural Gas in Europe, due to its flexibility to offer spot supply across the globe.

Over the quarter exports from the United States into Europe fell, in response to heightened Asian demand. Likewise, more cargos from the Middle East have been drawn to Asian markets as they seek to avoid the risks of taking cargos to Europe via the Red Sea and the costs via the Cape of Good Hope. This has led to a reduction in LNG imports to the UK by 44% last quarter as compared to the previous year (3).