1) What’s happening in the markets and why?
This week we have seen European and UK gas and power contracts drop to lows not seen for a very long time. Despite an unplanned outage at Norway’s Aasta Hansteen gas field and temperatures in both regions easing the market appears to be brushing the additional demand off and keeping a lid on prices. Norwegian flows have been stable of late with todays unplanned outage only expected to last a day. Whilst temperatures are easing, they are still expected to remain around seasonal normal levels until early March. This will mean lower storage withdrawals and will reduce demand for restocking during the injection season. The overall fundamental picture looks healthy, however with prices reaching levels they have done there could be some resistance seen at current levels.
2) What should energy buyers look out for?
The market should continue to keep an eye on the weather forecast as well as changes to Norwegian supply which could push prices up if there are any negative changes. Also, with Europe increasingly competing in international markets for liquefied natural gas, any changes that may create supply shocks need to be monitored.
3) What would you recommend?
With prices easing to levels not seen since 2021, depending on your risk appetite you may want to consider taking a level of cover for future periods and benefit from the year or year savings.
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