Geopolitical pressures continue to drive high levels of price volatility

NBP gas prices exhibited considerable volatility on Tuesday, with substantial fluctuations propelling the market to recent new highs before subsequently dropping back down in the late afternoon.

As a result, prices closed at a slight discount relative to the previous close.

Reports of renewed Russian attacks on critical Ukrainian gas storage infrastructure surfaced during the morning, feeding support into the near-curve due to an anticipated increase in EU exports to the region.

The Ukrainian Air Force claimed that a large missile and drone attack targeted oil and gas infrastructure primarily in the country’s Poltava region overnight into Tuesday, with state-owned operator Naftogaz elaborating multiple production facilities had been damaged. Russia has not commented on these claims.

Furthermore, the Ukrainian military claimed to have struck an oil refinery in Russia’s Saratov region on Tuesday. The local mayor confirmed that a fire had broken out at a refinery but did not disclose further details.

Steady UK & Norwegian output, alongside a steady stream of LNG arrivals may have helped ease the pressure during late afternoon trade.

According to the latest shipping signals, 5 vessels are expected to arrive at British terminals over the next 10 days. The total number confirmed to have berthed so far in February as of this morning is 12, for context only 15 arrived for the entire month of February last year. This reflects the attractiveness of current spot prices amid relatively weak demand across Asian markets.

Prices have continued to drop a little more this morning, with the Summer 25 front-season contract currently being offered circa 3p/therm (0.1p/kWh) below its previous settlement at time of writing.

If you want to see more information on the wholesale market trends subscribe to our weekly report here.

Price commentary courtesy of Crown Gas and Power