Low renewable generation increases pressure on low gas reserves
Marked volatility persisted at the NBP on Thursday, with a strong open and a short-lived retracement in the afternoon culminating in small gains to gas prices posted across the majority of the curve.
Summer 25 extended its premium over the Winter 25 contract to almost 6p/therm (0.2p/kWh), suggesting that supply concerns over the next few months were the foremost bullish driver across the session (data from ICE).
On the storage front, consistently high withdrawals continue to hammer European stocks. According to data from Gas Infrastructure Europe, EU facilities were 57.60% full as of 22nd January. This was 16.2 percentage points lower when compared to the same date last year (73.78%) and slightly above the distinctly low levels of 2021 (57.29%).
Similarly in the UK, storage levels are at just over 35% capacity, 59% lower than the same date last year.
Below average renewable generation resulting in higher gas-fired power demand is chiefly to blame for these relatively low levels on the back of a recent period of muted wind output and low solar power yields.
In other news, Storm Éowyn is forecast to pass through the British Isles from Friday.
The Met Office have issued a rare Red Weather Warning for parts of Scotland and Northern Ireland, widespread disruption is to be expected across much of the UK, with windspeeds of up to 100mph expected.
Adversely, this could limit wind generation as most turbines work best at wind speeds ranging from 7mph to 56mph, some models cannot operate properly in the presence of strong gusts and may need to be taken offline (Source- National Grid).
This morning, gas prices have opened at a slight discount when compared to yesterdays close, with the February 25 front-month contract currently being offered circa 0.5p/therm (0.017p/therm) below its previous settlement, though many are yet to trade at time of writing.
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Price commentary courtesy of Crown Gas and Power 