Weaker global demand and strong supply fundamentals continue to weigh on energy markets, offering fresh hedging opportunities.
April was marked by economic uncertainty, record-breaking renewable generation, and bearish fundamentals across oil, gas and power markets. Trade tensions and macroeconomic softness continue to influence market direction, while seasonal conditions and strong supply have helped create a favourable environment for energy buyers.
European gas prices remained soft through April, driven by mild weather, high LNG deliveries and robust renewable output. However, storage injections have been slower than expected—rising just 4.7% to reach 39% capacity. This suggests some hesitancy in the market despite favourable pricing.
Meanwhile, the European Parliament approved a proposal to reduce the gas storage target from 90% by 1 November to 83% by 1 December. This will be debated further in early May. Norway’s Hammerfest LNG facility, which supplies around 5% of national exports, began its annual maintenance and is offline until 10 July.
On the geopolitical front, the European Commission is working on a legal roadmap to ban new Russian fossil fuel contracts and help companies exit existing ones without penalties. In Asia, Chinese buyers are offloading US LNG cargoes due to steep import costs and softer domestic demand, with volumes from new contracts (like Venture Global) starting this month.
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Britain’s power grid is experiencing significant drops in demand, potentially reaching record lows this summer due to high solar generation and competitively priced imports from Europe. Forecast peak demand is 29.7 GW, with off-peak periods potentially dipping below 13.4 GW.
Short-term pricing came under renewed downward pressure, driven by unseasonably warm weather and record solar output. Germany saw solar generation exceed 50 GW, while the UK hit a high of 12 GW. Winter 2025 prices have also weakened, shaped by bearish gas fundamentals, macroeconomic pressures, and a softer oil market. Prices fluctuated within a £12.00 range and ended the month 12% down.
Global oil markets were shaken early in April by a wave of tariff announcements, sparking a $15+ per barrel drop in Brent prices to below $60—the lowest in four years. A partial recovery followed as some tariffs were delayed, pushing prices back up to around $63.
OPEC+ members are expected to propose accelerating output increases in June after a larger-than-anticipated rise in May. Despite this, the outlook remains bearish. Goldman Sachs predicts Brent could slip to $62 by December 2025 and $55 by the end of 2026, citing weak demand growth and global economic uncertainty.
April saw growing signs of economic strain across the Eurozone and UK. Business sentiment in the Eurozone declined sharply, with activity nearing stagnation as the US-led trade war continues to bite. The European Central Bank responded with a seventh interest rate cut this year, lowering rates to 2.25%.
In the UK, private sector output contracted at its fastest pace since 2022. Manufacturing and services both shrank, and export orders fell to a post-pandemic low. This slowdown is increasing pressure on the Bank of England to consider a rate cut in May.
This month’s price movements present a timely opportunity to increase hedging activity. Macroeconomic uncertainty and a weaker US Dollar are putting downward pressure on commodity prices. European fundamentals remain soft, with low demand, strong solar and hydro generation, high LNG availability and record French nuclear output contributing to a well-supplied market.
However, the sluggish pace of gas storage injections is a key watchpoint. In this context, the current environment offers a strategic opportunity to lock in value for forward seasons and mitigate future market volatility.
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