Energy Prices Ease as Iran Talks Resume Amid Naval Blockade

Market Update:

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• Prices did ease to some degree late in the day on Monday.
• The U.S. military began a blockade of Iran's ports, angering Tehran and adding uncertainty around the crucial waterway, although hopes for dialogue to end the war provided some relief to oil markets where benchmark prices fell below $100 on Tuesday.
• Sources told Reuters that Washington and Tehran have left the door open to dialogue, and a U.S. official said there was forward motion to try to get to an agreement.
• U.S. AND IRANIAN NEGOTIATION TEAMS TO RETURN TO ISLAMABAD FOR PEACE TALKS LATER THIS WEEK

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NATURAL GAS:
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Gas prices have opened lower this morning with no major updates on the geopolitical front whilst closer to home European temperatures are rising, reducing LDZ and heating demand.
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The front month May-26 contract has retreated back towards €45/MWh, down €2/MWh from Monday’s trading session. The NBP front month has also fallen to 114p/therm, dropping from 120p/therm levels seen on Monday.
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With temperatures increasing across the board, European demand has fallen by around 380GWh/day helping to keep prompt and DA prices suppressed. TTF DA has fallen by €1/MWh day on day. The UK will rapidly warm to 5°C above seasonal average and remain above average until the weekend. Germany will see temperatures begin to warm today and reach their peak on Thursday.
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The US naval blockade on the Strait of Hormuz began yesterday, with the US saying it will not impede ships using the Strait of Hormuz to go to and from non-Iranian ports. According to reports, one tanker had passed through heading to China. There has been major update surrounding the discussion to end the war.

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ELECTRICITY:
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Power prices are tracking in line with gas this morning, showing small losses upon opening. An improving renewable picture and no major update geopolitically have ensured prices are softer during the early session.

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Solar generation will increase today in line with warmer temperatures, allowing for stronger renewables and pushing some weaker gas demand at the prompt for generation. Wind generation remains poor across Germany, with an expected 17.5GWh of generation expected on Wednesday and Thursday. Wind is forecast to be below seasonal average until 23rd April.

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Wind generation and renewable outlook is more promising in the Netherlands, with wind generation above seasonal average until Friday, before tailing off into the weekend.

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The French nuclear availability continues to tail off dropping to 43GW, however the actual capacity has returned closer to the forecast following a short period of maintenance at one of the facilities.

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Brent Oil continues to trade at the $100/bbl mark, taking direction from the ongoing conflict in the Middle East. Oil prices remain elevated with the major shipping routes and production facilities in the Gulf remaining offline. Brent is trading around $30/bbl higher than at the end of February.

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Latest Price:
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Latest Gas & Power Annual Chart:
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