Little movement to wholesale prices despite reliance on gas for power

Volatility was relatively low at the NBP on Tuesday, with minimal losses posted across the majority of gas contracts.

Prices continued to fluctuate within a narrow range established over the past few sessions, despite bullish demand fundamentals. A sharp increase in gas demand may have served as a key source of increases at the front-end, National Gas data shows that gas-fired (CCGT) generation rose by 63% when compared to the previous gas-day. Accounting for 50% of the power mix, gas had to account for a lull in wind output, which accounted for only 14.4% over the same period.

Although EU storage continues to trail behind last years levels, holding at around 10% points lower to the day, the UK’s domestic reserves are fairing relatively well.

According to data from National Gas, Britain’s comparatively small storage reserves are holding slightly higher than the same date last year (25.1 TWh vs 24.3 TWh) but crucially, the UK’s considerably large LNG storage is around 9.7% higher than the same last year amid the recent uptick in arrivals.

Strong, uninterrupted Norwegian exports likely helped put a lid on demand pressures. Pipeline flows into Easington and St Fergus reached 86.5mcm on Tuesday, representing an increase of 15.4mcm day-on-day and meeting approximately 30% of system demand (data from Gassco).

NBP gas prices have opened at a slight discount this morning, with the January 25 front-month-contract currently being offered circa 2p/therm (0.07p/kWh) below its previous settlement at time of writing.

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Price commentary courtesy of Crown Gas and Power