Energy markets moved higher into early May, as fading hopes of a quick resolution in the Middle East and continued uncertainty around LNG flows pushed gas and power prices upward.
Power prices increased over the past two weeks, as markets responded to renewed uncertainty about the outlook for the Iran conflict.
Low power prices in mainland Europe led to increased imports into the UK, although this was not enough to prevent power price increases.
Strong renewable output helped to offset some upward pressure, but forecast lower wind generation in early May could now contribute to rising electricity prices.
Gas prices moved higher as concerns over prolonged disruption in the Strait of Hormuz lifted market sentiment and increased risk premiums.
LNG supply to the UK remains limited, with cargoes continuing to be diverted to higher-priced markets elsewhere.
Despite the price increases, demand has remained low due to mild weather and reduced use of gas for power generation.
Markets are likely to remain sensitive to developments in the Middle East and to LNG supply availability. Storage levels and demand trends will continue to shape price direction as gas reserves continue to build.
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