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Energy Market Insights: April saw some respite

26 May 2022

Average power in April retreated from the historical March high. Prices dropped by 25% on March.

Prices decreased as markets became  accustomed to changing fundamentals of the gas market.

Gas was bearish in April

  • Gas prices were bearish throughout April, but rapidly descended from mid April onwards.

Markets have calmed somewhat since then for the following reasons:

  • Fundamentals of gas market have not changed: Gazprom’s YTD production up 1% on same period in 2021. Market now accustomed to lack of clarity on Gazprom deliveries.
  • Liquid Natural Gas (LNG) continued it’s record breaking delivery schedule in April, breaching the record in January.
  • LNG and mild weather continued to help the European storage situation, bringing storage within historic averages.

  • Gas prices very volatile since war began.
  • Initial spike, calm as deliveries Westward continued, spike to 500p/th, dropped again on peace talk hopes, rose to 300p/th on standoff over payments in Rubles.
  • Markets have fallen since as Ruble standoff was by and large bluff and not expected until mid May at least.
  • Market caught unawares by Bulgaria and Poland cut off – but has shrugged it off – SO FAR.
  • EU/US announced 15bcm (increasing to 50 bcm) LNG deliveries to Europe, as Europe weans off Russian gas.
  • Centralised EU procurement of gas commencing.

Renewables in line with March

  • April was similar to March with renewables contributing just over 1/3 of the generation Mix.

Outages in Irish power plants increased slightly

  • Outages have increased on Jan and Feb lows, but continue at a reasonable level.
  • Hopefully, 2021 Capacity Crisis will be averted

What’s ahead for the next 12 months?

  • Power Forward prices coming off March high as markets get more certainty on commodities.
  • The breakout of war, European sanctions and markets fear of further sanctions against Russian energy exports has increased the risk premium in forward pricing.
  • That premium will remain while the uncertainty of the Ukrainian situation remains.

Key drivers for forecasting

  • Geopolitical situation in Ukraine – Negative
  • Weather – Mild winter – Storage hasn’t been depleted as feared – Positive
  • Pent up demand for and EU Mandated storage levels will impact Gas Summer refilling season – will support prices – Negative
  • LNG deliveries will remain strong – US key source – Positive
  • Moral and Political demand for sanctions on gas and oil – Negative



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