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Flagship Energy’s Tejal Shah Energy Markets Update – 1st May 2024

Tejal Shah, Head of Trading & Risk at Flagship Energy provides a market update

1) What’s happening in the markets and why?

With risk premiums being reevaluated we have seen prices ease compared to April’s highs over the last couple of sessions. Despite being in a period of heavy Norwegian maintenance and with low levels of LNG arrivals, the warmer temperatures and increasing wind speeds have offset the loss of supply, resulting in lower prices. US LNG feedgas has also been increasing indicating that at least one of three liquefaction trains at Freeport LNG’s export plant in Texas was exiting an outage. Finally talks of a potential ceasefire agreement in the Middle East has also reduced the geopolitical risk. Elsewhere energy ministers from the G7 countries have agreed to end the use of coal in power generation during the first half of the next decade but gave leeway to Germany and Japan whose economies depend on the fuel.

2) What should energy buyers look out for?

Energy buyers should continue to keep a close eye on the fundamental drivers as well as developments in the Middle East. Although prices have eased, they still remain volatile. In particular, changes to the weather forecast, unplanned or extended maintenance and shifts in global LNG markets.

3) What would you recommend?

With increased volatility, depending on your cover levels, taking some volume now still represents good value in comparison to where prices have been. However, if you have already taken a significant amount of cover and are comfortable you may want to hold off closer to delivery to try and capture extra value.

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