Wholesale prices continue to fluctuate with narrow range

NBP gas prices continued to fluctuate within a narrow range on Wednesday.

A slight correction was observed yesterday with the majority of prices easing amid news of a Slovakia-Azerbaijan supply agreement for December.

The largest energy supplier in Slovakia, SPP, confirmed on Wednesday that they had signed a short-term supply agreement with Azerbaijan’s state-owned SOCAR for the supply of pipeline natural gas in the month of December as part of a test pilot ahead of the Russia-Ukraine transit agreement expiry on December 31st. It’s unclear if this agreement will convert into something more permanent but it will be reassuring for European gas hubs to hear that contingency plans are in motion ahead of the expiry.

Below average wind generation likely served as a source of underlying pressure not helped by unseasonably high levels of demand across Northwestern Europe.

According to data from National Grid, wind turbine output averaged just 4.4GW across Wednesday gas-day, with CCGT (Combined Cycle Gas Turbines) having to account for 49.6% of the power generation mix, up slightly from 46.8% the day prior.

In other news, the building Russian counter offensive in the Kursk region continued to play into bullish sentiment due to the risk that key infrastructure, essential for existing Russian transit via Ukraine, could be damaged by heavy shelling in the region.

The market appears to have experienced a strong rebound this morning, with the December 24 front-season contract currently being offered circa 4p/therm (0.14p/kWh) above its previous settlement, at time of writing.

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Price commentary courtesy of Crown Gas and Power