Sharp increases wipes out lows seen earlier in the week

Wednesday was yet another day of pronounced volatility at the NBP, with natural gas prices seeing sharp fluctuations throughout the session.

A late afternoon rally regrettably managed to reverse much of the reductions seen across this week after key technical levels came back into focus.

Elevated gas-fired power demand and a bullish wider energy complex may have contributed to steep gains of almost 9p/therm (0.31p/kWh) posted on the soon to be April 25 front-month contract.

According to data from National Grid, wind power accounted for 20% of generation across the gas-day, this meant that gas-fired (CCGT) plants had to cover a relatively high 46% of the power mix over the same period.

The British system was subsequently forecast (at 12:00 GMT) to be 12.3mcm undersupplied by the end of the day.

Contracts further out may have found support from strength on related oil and carbon markets. According to data from ICE, the European benchmark contracts for crude oil and carbon allowances saw day-on-day gains of 2.1% and 2.5%, respectively.

With that said, healthy European LNG imports have and should continue to serve as a price ceiling for gas prices.

According to the latest shipping signals, we can expect up to 9 vessels to arrive at British terminals over the next two weeks, with wider European spot prices remaining attractive when compared to other LNG reliant regions such as East Asia.

A steady stream of LNG cargoes will be key to helping Europe re-stock its below-average storage levels over the next few months.

This morning, although gas prices had initially opened at a slight premium, key contracts are currently being offered very much in line with their previous settlements, though many are yet to trade at time of writing.

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Price commentary courtesy of Crown Gas and Power