Prices climb to 16 month highs amid high demand outlook

NBP gas prices climbed to new 16 month highs on Monday amid an unchanged, high demand outlook for February as the cold snap bites.

Elevated volatility was observed, with curve contracts fluctuating within a limited range throughout the day.

The Summer 25 contract ultimately settled at the highest level of any front-season contract since 23rd October 2023 after going up by an additional 4.5p/therm (0.15p/kWh) above its previous close.

Storage concerns and geopolitical uncertainty continued to serve as underlying sources of support for curve contracts, with near term supply and demand constraints emboldening bullish sentiment across the prompt and near-curve.

According to data from National Gas, unplanned maintenance at the UK’s Barrow (North) terminal began on Saturday 8th, removing 6mcm/day of capacity due to a ‘technical process issue’, the outage is not expected to be resolved until Friday 14th.

Renewed Russian strikes on Ukrainian energy infrastructure may have further hampered EU storage injection efforts over the past few days. Ukraine reportedly had to import around 16mcm of pipeline gas from Hungary, Slovakia and Poland on Sunday amid falling production levels and difficulty in accessing domestic storage reserves due to the war.

In other news, Latvia, Lithuania and Estonia (collectively known as the Baltic States) joined the European Unions integrated power network over the weekend, disconnecting from the Russian transmission system.

The transition process had been ongoing since 2007, but was greatly accelerated following the Russian invasion of Ukraine in 2022.

This morning, the market has opened at a slight discount, with the March 25 front-month contract currently being offered circa 1p/therm (0.03p/kWh) below its previous settlement, at time of writing.

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Price commentary courtesy of Crown Gas and Power