Early May saw the energy prompt under pressure from temperatures rising above the seasonal normal and an increase in power capacity as Hunterston B-8 nuclear facility and the French interconnector returned following outages. Further pressure came from an outage at the UK’s major natural gas storage facility, Rough, which restricted withdrawal and injection capacity at a time when injections typically occur. Gas exports to the Continent ramped up significantly to highs of 35 mcm/d – helping to tighten the system. Some bearish pressure came from pipeline disruptions, beginning early on in the month with yearly maintenance commencing on the Nyhamna gas field, curtailing Langeled imports by 20 mcm/d. The front of the curve was unfazed by bearish pressures felt on the prompt and instead succumbed to bullishness brought about by a weaker GB pound, encouraging buying interest among continental traders. The weakness came after another opinion poll had made it apparent that the opposing EU referendum camps were on equal footing and poor UK PMI data showing a decline in manufacturing output. The far curve found influence from the crude oil market which started the month with weakness despite oil disruption; escalating violence in Libya and wildfires raging in the Canadian Oil Sands region of Alberta were counteracted by a strengthening of the dollar and a rise in Middle Eastern and North Sea oil production.  

As we moved into mid-May we saw the prompt climb higher as the Nyhamma gas field went into an unplanned outage following maintenance. The UKCS joined Langeled with its own spat of outages sending the UK gas system into heavy undersupply. The already tight system was compounded further by a firming of the Belgian hub to the NBP, leading to a ramp up of exports to Belgium. High LNG send-outs acted as a strong bearish counter for the prompt, reaching highs of 73 mcm/d during high-flow testing at the South Hook terminal. UK power supply was hit by the commencement of planned maintenance on the BritNed interconnector, cutting capacity by 1 GW. It is worth noting, however that strong gas-fired and solar power generation displaced the need for coal-fired generation and for the first time since the start of the industrial revolution coal did not contribute to the UK energy mix. The far curve showed relatively little net movement with large swings on the crude oil market thanks to a firming US dollar before reports of a decline in US crude stocks.  

Although the Langeled pipeline stabilised briefly following its string of outages both planned and unplanned, the UKCS remained a problem with outages at the Bacton SEAL terminal. This Norwegian stability was short lived however as we entered its maintenance season; both Kollsnes processing plant and the Troll gas field went offline reducing Norway’s export capacity by 145 mcm/d. LNG send-outs remained strong throughout the month with ample gas expected from scheduled tanker arrivals in June, helping alleviate the tightness. Despite relatively poor overall supply, the Belgian gas line reached export highs of 37 mcm/d with the NBP/ZEE spread closing. Oil prices eventually rose enough to breach the psychological barrier of $50 per barrel, but fell back down with a strengthening dollar and as traders cashed in with mounting worries of a return of the US shale industry.